{"id":71322,"date":"2025-02-06T10:55:10","date_gmt":"2025-02-06T10:55:10","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/riskless-reliance-industries-rights-investment-strategy\/"},"modified":"2025-02-06T10:55:10","modified_gmt":"2025-02-06T10:55:10","slug":"riskless-reliance-industries-rights-investment-strategy","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=71322","title":{"rendered":"Riskless Reliance Industries Rights Investment Strategy"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p style=\"text-align: justify;\">This is a Riskless Reliance Industries Rights Investment Strategy for those over 2.3 Million Shareholders already holding RIL shares.<\/p>\n<p style=\"text-align: justify;\"><strong>It is not a recommendation to buy RIL cum rights\u00a0<\/strong><\/p>\n<p style=\"text-align: justify;\">It\u2019s a no brainer yet I\u2019m just penning a brief note <span style=\"color: #ff0000;\">because some have told me they hold Reliance but are skipping the Rights !<\/span><\/p>\n<p style=\"text-align: justify;\"><strong>Don\u2019t !<\/strong><\/p>\n<p style=\"text-align: justify;\">I\u2019ll keep this short without going into the fundamentals of RIL Operations and future which in itself is quite another story<\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #008000;\"><strong>Adopt this simple Riskless Rights Investment Strategy as below<\/strong> <strong>if you\u2019re concerned about what the future holds for Reliance and don\u2019t wish to increase exposure by increasing your holdings through the Rights Issue<\/strong><\/span> \u2026.well,if you\u2019re deeply concerned you should not have been holding Reliance in the first place<\/p>\n<p style=\"text-align: justify;\"><strong>This Strategy will reduce your Holding Cost of existing RIL shares by replacing 1:15 of your holding with the Rights entitled shares at a much lower Rs 1257\/share to currently traded prices(see below)<\/strong><\/p>\n<p style=\"text-align: justify;\"><span style=\"text-decoration: underline;\"><strong>Chronology <\/strong><\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"text-decoration: underline;\"><strong>Rights Terms\u00a0<\/strong><\/span><\/p>\n<ul style=\"text-align: justify;\">\n<li>Issue of 42,26,26,894 equity shares of Face Value Rs 10<\/li>\n<li>Issue Price is Rs 1257 including a Share Premium of Rs 1247<\/li>\n<li>Issue Ratio is 1:15 or One Rights share for every 15 held<\/li>\n<li>Issue Size is Rs 53124 crs<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><span style=\"text-decoration: underline;\"><strong>Computation of Ex-Rights Theoretical Price\u00a0<\/strong><\/span><\/p>\n<p style=\"text-align: justify;\">Reliance is traded cum rights at Rs 1575 to Rs 1585 range just over half an hour before closing today,Monday,May 11,2020.It will trade cum rights only till tomorrow<\/p>\n<ul style=\"text-align: justify;\">\n<li>Value of 15 RIL shares currently at cum-rights price of\u00a0 Rs 1585 per share=&gt;Rs 23775<\/li>\n<li>Price of 1 Rights Share as entitled =Rs 1257<\/li>\n<li>Immediate Value of Holding post rights adjustment will then be 16 shares for=&gt;Rs 23775+Rs 1257=&gt;Rs 25032<\/li>\n<li>Therefore ex-rights theoretical price is Rs 25032\/16=&gt; Rs 1564.50<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">\u00a0<span style=\"text-decoration: underline;\"><strong>Riskless Rights Investment Strategy<\/strong><\/span><\/p>\n<p style=\"text-align: justify;\">For ease of understanding and computation I have used a hypothetical Holding of 15 shares based on a 1:15 Rights ratio. You can extrapolate this to your actual RIL Holding to compute how many Rights Shares are you entitled to and sell that quantity in Step 1 as below and apply for the entitled shares in Step 3 to replace those sold<\/p>\n<ul style=\"text-align: justify;\">\n<li>Sell One Share immediately day after on ex-rights traded basis on Wednesday,May 13,2020 .Let\u2019s assume this is @ Rs 1567 near the computation as above.You will thus be left with 14 shares<\/li>\n<li>This will immediately lock in a beneficial\u00a0 Rs 310 differential between Rights Issue Price and traded ex-rights Price and give you proceeds of Rs 1567<\/li>\n<li>Subscribe for your entitled One Rights Share at Rs 1257 when the Rights Issue Opens and before it closes on\u00a0 dates to be announced shortly.Payable on Application is only 25% or Rs 314.25 per share.You can thus use part of your proceeds to apply for the rights<\/li>\n<li>Your Holding in RIL will return to 15 shares which you held originally<\/li>\n<li>Your Holding Cost for your existing 15 shares will reduce by Rs 310\/15 = Rs 20.67 per share.Have not considered the Tax Payable on the gains made on sale of the One share as above.This would be marginal<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">Promoters ,Ambanis who hold 50.03% of the Equity as on December 31,2019 have already said they will be participating in the Rights and will also subscribe to any under-subscribed portion.This of course serves as a reassurance but why should you let them take this advantage by transferring your risk-less differential to them if you opt wrongly to skip the Rights<\/p>\n<p style=\"text-align: justify;\">You\u2019re welcome to connect with me on <a href=\"https:\/\/www.gauravblog.com\/cdn-cgi\/l\/email-protection\" class=\"__cf_email__\" data-cfemail=\"86e1e7f3f4e7f0c6ecf5e7eaf6eee7e7a8e5e9eb\">[email\u00a0protected]<\/a> or even on my mobile +91-9820162597 if you need any further clarity on this<\/p>\n<p>Cheers,<\/p>\n<p>Gaurav<\/p>\n<p><!-- AddThis Share Buttons generic via filter on the_content -->\t\t\t\t<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>This is a Riskless Reliance Industries Rights Investment Strategy for those over 2.3 Million Shareholders already holding RIL shares. It is not a recommendation to buy RIL cum rights\u00a0 It\u2019s a no brainer yet I\u2019m just penning a brief note because some have told me they hold Reliance but are skipping the Rights ! Don\u2019t [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[96],"tags":[14111,10910,21145,13922,37362,11636],"dealstore":[],"offerexpiration":[],"class_list":["post-71322","post","type-post","status-publish","format-standard","hentry","category-investing","tag-industries","tag-investment","tag-reliance","tag-rights","tag-riskless","tag-strategy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Riskless Reliance Industries Rights Investment Strategy - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=71322\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Riskless Reliance Industries Rights Investment Strategy - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"This is a Riskless Reliance Industries Rights Investment Strategy for those over 2.3 Million Shareholders already holding RIL shares. 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