Reliance Industries’ partly-paid shares end at Rs 700 apiece, jump 8% on initial day of listing

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Published: June 15, 2020 3:54 PM

Partly paid-up rights issue shares of Reliance Industries ended up 8.5% at Rs 700 per share on BSE Sensex after opening the trading session at a premium price of Rs 689 apiece.

The rights shares that are going to be listed have a partly paid-up amount of Rs 314.25.According to the payments structure proposed by RIL for the Rs 53,124 crore rights issue, those who subscribed had to only pay 25% of the price right now and the remaining in two installments next year.

Partly paid-up rights issue shares of Reliance Industries ended up 8.5% at Rs 700 per share on BSE Sensex after opening the trading session at a premium price of Rs 689 apiece. The shares were expected to list even higher but a weak market on Monday pulled the prices down. The stocks that are partly-paid up as of now, touched a high of Rs 710 per share and a low of Rs 665. The Rs 53,124 crore rights issue of Reliance Industries Ltd (RIL) was the biggest ever to have entered the Indian stock market.

According to the payment structure proposed by RIL for the Rs 53,124 crore rights issue, those who subscribed had to only pay 25% of the price right now and the remaining in two installments next year. This helped the RIL rights issue get oversubscribed 1.6 times despite a muted market sentiment owing to the coronavirus pandemic and the resultant slowdown in the world economy. The rights issue offered shares of the company at Rs 1,2570 per share, a 14.8% discount. The fully paid up shares of the Mukesh-Ambani led RIL, on the other hand, ended the trading session flat, aided by some recovery in the later hours of the trading session. RIL shares on BSE Sensex closed at Rs 1,589 per share, up 0.04%. The stock held on despite the weak market sentiment that saw the benchmark index tank as much as 800 points during the day.

Mukesh Ambani led-RIL on Saturday evening announced getting US-based private equity firm TPG to invest Rs 4,547 crore for a 0.93% equity stake in its digital telecommunications arm Jio Platforms. The investment by TPG was followed by another private equity firm, L Catterton, investing Rs 1,895 crore for a further 0.39% equity stake in the company. Reliance Industries group has raised a total investment of over Rs 1.04 lakh crore, by selling a combined 22.28% equity stake in Jio Platforms. Analysts at Kotak Institutional Equities think that the surplus cash inflows may be used by RIL as a war chest to accelerate organic initiatives or pursue inorganic opportunities amid ongoing adversities, besides repaying debt/liabilities.

According to Kotak Institutional Equities, partly-paid shares of RIL may act as a long-dated call option to play the stock. “Our NPV-based calculation suggests that partly paid shares may trade at a discount of Rs 850-900 to RIL’s stock price, depending on the cost of capital assumed by investors,” it said. 

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