Reliance Industries’ partly paid shares rally 22% in just 5 days; stock jumps 10% today

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June 19, 2020 3:28 PM

Reliance Industries' partly paid shares (RIL PP) today hit 10 per cent upper circuit at Rs 812.90 apiece on BSE after rallying 22 per cent in just five days after listing on BSE and NSE

Reliance Industries The surge in RIL PP share price came after Reliance Industries chairman Mukesh Ambani announced that the firm has become net debt-free nine months ahead of its deadline

Reliance Industries’ partly paid shares (RIL PP) today hit 10 per cent upper circuit at Rs 812.90 apiece on BSE after rallying 22 per cent in just five days after listing on BSE and NSE. The surge in share price came after Reliance Industries chairman Mukesh Ambani announced that the firm has become net debt-free nine months ahead of its deadline. RIL PP share price opened at Rs 758.50 and hit an intraday low of Rs 748. On the listing day, partly paid-up rights issue shares of Reliance Industries opened at a premium of Rs 689 per equity. Reliance Industries completed India’s biggest ever rights issue of Rs 53,124 crore earlier this month. “The partly paid shares have an element of call options attached since the investor can decide whether they want to participate in the further installments of the paid-up amount when Reliance calls it over the next year in May and November 2021,” Mohit Mehra, business analyst at Zerodha told Financial Express Online. “In case of up moves in RIL ordinary shares, this built-in call option quality of partly-paid instrument causes gains on RIL PP to be higher in percentage terms,” he added.

In the intraday deals so far Reliance Industries share price has jumped 8 per cent to hit a fresh high of Rs 1,788.60 apiece taking the market capitalisation above Rs 11 lakh crore. “Reliance Industries shares seem to have caught the fancy of investors, with the stock almost doubling from its 23rd March low of 864. A rise in Telecom ARPU coupled with assets sales, have taken Reliance on a different trajectory all-together,” said Aamar Deo Singh, Head Advisory, Angel Broking. The sharp rally in share price comes on back of the 11 investments in Jio Platforms and mega rights issue, which helped the company to become net debt-free. So far, Reliance Industries has sold 24.7 per cent equity stake in Jio platforms and raised Rs 115,693 crore. 

According to the payment structure proposed by Reliance Industries for the Rs 53,124 crore rights issue, those who subscribed had to only pay 25 per cent of the price right now and the remaining in two installments in May and November next year. Mohit Mehra further explains that the theoretical value of the partly paid shares should be higher of (1) 25% of the price of ordinary RIL shares and (2) Price of ordinary RIL shares (75% of Rs 1257). “There could be some premium or discount on the account of interest rate, volatility, and liquidity in the partly-paid shares among other things,” Mehra explained. 

As of 3.15 PM, RIL shares were trading 6.19 per cent higher at Rs 1,757.45 apiece on BSE, as compared to a 1.47 per cent rise in S&P BSE Sensex. In the recent research reports, foreign brokerages such as Morgan Stanley, Goldman Sachs and CLSA recommended to ‘buy’ the stock. 

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