Reliance Industries Announces 1:1 Bonus Share Issue: Key Details and Implications
What Does the Bonus Issue Mean?
A bonus share issue is a way for companies to reward existing shareholders by offering additional shares at no extra cost. In this case, for every share held, shareholders will receive an additional share, effectively doubling their holdings. RIL's decision to issue bonus shares is seen as an "early Diwali gift" to its investors, showcasing the company’s commitment to enhancing shareholder value.
This will be RIL's sixth bonus issuance since its inception, following previous issues in 1980, 1983, 1997, 2009, and 2017. Notably, the last 1:1 bonus share issuance occurred in 2009, while the company also offered a 6:10 ratio in 1983 and a 3:5 ratio in 1980.
Market Response and Stock Performance
As of the latest trading session, RIL shares closed at ₹2,708, marking a 0.75% increase. However, it’s important to note that the stock has experienced a decline of 7.98% over the past month. In contrast, the BSE Sensex has risen by 12.77% during the same period, highlighting a relative underperformance for RIL.
Year-to-date, the stock is up 4.56%, suggesting a moderate recovery amid broader market trends. Investors will be keen to see how the announcement of the bonus shares affects market sentiment in the lead-up to the record date.
Financial Performance Overview
Despite the positive news regarding bonus shares, RIL's recent financial performance has raised some eyebrows. The company reported a 4.78% decline in consolidated net profit for the second quarter of FY25, amounting to ₹16,563 crore, down from ₹17,394 crore in the same quarter last year. This drop can be attributed to various factors, including an unfavorable demand-supply balance, which led to a 50% decline in transportation fuel cracks.
On a brighter note, total income for RIL increased slightly by 0.65% to ₹2,40,357 crore, compared to ₹2,38,797 crore in the previous year. The oil-to-chemicals (O2C) segment saw improved revenue due to higher volumes and increased domestic placement of products. Additionally, digital services revenue benefited from revised telecom tariffs and the scaling up of its digital services business.
What’s Next for Reliance Industries?
Looking ahead, the bonus share issue is likely to attract more investor interest and could positively impact RIL's stock price as the record date approaches. However, investors should remain cautious and consider the underlying financial performance and market conditions before making investment decisions.
In conclusion, Reliance Industries' announcement of a 1:1 bonus share issue presents a unique opportunity for shareholders. As always, it is advisable for investors to stay informed and consult with financial advisors to navigate the complexities of the stock market effectively.
Reference from:-https://www.businesstoday.in/markets/stocks/story/reliance-industries-fixes-record-date-for-11-bonus-issue-details-here-450407-2024-10-16