Reliance Industries Ltd

Reliance Industries unveils sixth 1:1 bonus share issue

Reliance Industries Ltd (RIL) announced approval by its board to issue one bonus share for one equity share, thereby marking the company's sixth bonus issue. The latest move is a continuing saga of rewarding the shareholders on the part of Reliance and has come when the company is one of the most valued outfits on Dalal Street.

Bonus Issue Details

The bonus shares would be issued in the ratio of 1:1, hence one new equity share of face value fully paid up for every one equity share held. The record date for this issue will be declared in due course. In a regulatory filing, Reliance said the bonus shares would be issued out of securities premium account, general reserve, and retained earnings available as of March 31, 2024.

Impact on Share Prices

After the announcement, RIL shares fell 1.54% to Rs 2,983.10. While the bonus issue does not alter anything as far as the valuation of the company is concerned, it dilutes the per-share ratios that comprise EPS and book value per share. The price, therefore, corrects downwards in the proportion of bonus shares issued.

History of Bonus Issues

Other bonus issues of Reliance Industries were issued in 2017, 2009, 1997, 1983 and 1980. After the 2017 bonus issue, the stock price zoomed from Rs 725.65 to around Rs 3,015 - by 318 per cent. The 2009 issue too followed a 1:1 ratio. The company's earlier bonus issues were in different ratio, in 6:10 in 1983 and 3:5 in 1980.

Additional Corporate Actions

Besides the bonus issue, the shareholders of Reliance Industries also approved increasing the company's authorized share capital from Rs 15,000 crore to Rs 50,000 crore. The board approved forfeiture of partly paid-up equity shares if the call money is not paid on or before September 20, 2024. Such a step would be taken in respect of shares for which the first or second call money or both are not paid by the said date.

The recent bonus issue by Reliance Industries underlines the company's determination to consistently enhance the value of its shareholders, as well as the strategic amendment in its capital structure. Indeed, a proposed bonus issue and increase in capital will further the efforts of the company in the future and help it strengthen its financial position while reasonably rewarding its shareholders.