hello friends
After the rights issue, the equity of company will increase. will it not decrease EPS ?
Can reduced EPS can have nagative impact on share price?
If any one can clarify this.
Disc: Want to do profitbookin.
If we exclude the O2C business and value RIL based on just Jio and Retail, it comes out to be ~Rs. 7 lakh crore. Considering the company is going to be net debt free by FY21, the consumer division will also be valued at roughly 7 lakh crore. After considering the additional shares from the rights issue, this comes out to be 1000-1050 per share. If you get RIL around this price, you get the O2C business for free. O2C cannot be written off so soon. Oil will still be used and the business will bounce back at the very least.
Yes the rights issue will add new shares, but also reduce the debt (and the interest) which will increase the EPS even after considering the dilution.
Disc: Invested. No additions during the fall
The rights entitlements are being traded in electronic form for the first time. As the payment terms of reliance rights is staggered, buying the rights is like buying share in reliance on instalment payment basis. This will have advantages like the stock options. It is not clear how the rights payment has to be made and whether partly paid shares also would be listed. Could some one please explain it. Thank you
Recent examples are of traded partially paid up shares are IB Ventures,Tata Steel & Hatsun.
With regards to payment, in addition to the usual modes of subscription,
they have provided an additional option via the registrar’s web based platform for applying for the same.
The payment can be made by Netbanking or UPI,please use the bank account linked to your demat account in which you hold the Rights entitlements.
Once the first issue closes then the company will issue the partly paid up shares and they will be tradable,the next installment is 25% in May 2021(Rs 314.25 per share) and final installment of 50% in Nov 2021(Rs 628.5 per share).
If I sell RIL-RE shares, then I am not eligible to apply for rights issue. Is this correct?
That is correct,If you sell your RIL RE shares you cannot apply.
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Thanks Krishna Ji.
This is why I like Mukesh Ambani. He is exact photocopy of his father Shri Dhirubhai (respect). They really care for small and marginal shareholders also. I think This is the first time such an offer is given to shareholders in India.
I have taken a stab at pricing the partly paid up share which will list on 12th June. Not sure if this is right though, would appreciate corrections / pointers -
My best guess is that this should be priced as:
25% x (RIL price) + 75% (Call option on RIL with strike of 1257 & expiry in Nov-21)
Based on CMP of 1423 this works out to -
356 + 230 = 586
Assumptions used in the option calculator -
Volatility - 25%
Interest Rate - 5%
Days to Expiry - 507 days
If you increase any of these the value of the option increases.
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Post listing can the price of the partly paid shares go to negative or atleast zero? The scenario could happen if the price of fully paid shares go down to say 800 Rs then the owner of a partly paid share will have a liability of 943 Rs which is more than the asset value he could realise.
The price of the partly paid share should be materially more volatile than the RIL share given the fixed liability of 943 to the owner of the partly paid share
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How to search RIL RE share on Broker site, NSE or BSE? I could not search them
There is no liability of the owner of the partly paid share.In fact, in such a scenerio, he loses less than owner of a fully paid share presuming that the fully paid shares have been purchased at around the rights issue price or higher.
I have rights to buy 10 shares. I can apply for it using my SBI online banking, right? using eASBA facility provided by the bank.
It’s listed on BSE also. Check the link;
@Caution_Investor
In Jan only SEBI allowed to issue rights form in demat form to trade, so nothing to do with thought process of Ambani 
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Yes you can apply using SBI online ASBA as long as the bank account is in your name.
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Mukesh Ambani Prepares Facebook-Backed Jio Platforms for Overseas IPO. Jio Platforms combines Reliance’s digital assets with its wireless carrier, Reliance Jio Infocomm Ltd., into a holding company aimed at becoming a top e-commerce and payments operator in India’s vast consumer market.
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A great article on Reliance in Business Insider in 1997. Many parallels with the Reliance of today 
http://reflections-shivanand.blogspot.com/2007/08/reliance-story.html
The whole article is worth reading. Some excerpts:
Reliance provokes extreme reactions in India. Either you are pro-Reliance or anti-Reliance. There is nothing in between.
With his recent dramatic announcement of the 1: 1 bonus share issue after a hiatus of 14 years, Dhirubhai is again back to being the God of the shareholders. Divinity aside, what Business India found was a remarkable story of the emergence of a highly competitive mega-corporation with skills and vision required to compete in a globalising economy. Well on its way to hitting $8-10 billion by the year 2000, the Reliance group is possibly the only real global giant in India.
The view of analysts is that despite the controversies that have dogged Reliance, “it has created assets for all to see.” The asset growth is quite phenomenal.
The first attempt at risk-taking was at Patalganga, when RIL took its chances by putting up capacities that were bigger than the entire Indian market for PFY and PSF. It paid off. Similarly, when RIL was putting up its first pvc plant in Hazira in 199091, the rated output of 180,000 tpa was larger than the total Indian demand. As a Reliance watcher and family insider pointed out, “The hallmark of the father and sons is that after meticulous research they rely on their sharp trading instinct. It is this instinct that makes them incessantly bet on growth and virtually create the growth by generating massive economies of scale.”
While RIL’s low capital and operational costs are recognised globally, another factor which makes them competitive is the speed at which they erect plants. All the Hazira plants were erected in record times, with the giant cracker coming up in only 29 months. All indicators point to Jamnagar proceeding at an even more frenetic pace. According to Sharma, “The main reason is that the Ambanis sit on everybody’s head, be they contractors, sub-contractors, or employees, and put in long hours themselves. Do you know that there were a couple of CMD’s of IPCL who never spent a night at Nagothane when it was coming up, even though it was their biggest investment at that time?” Hetal Meswani, a cousin of Mukesh and Anil and an executive director of RIL, was literally living in Hazira during construction and has now moved to Jamnagar. Engineers recall how Mukesh Ambani would spend days on end at Patalganga when it was coming up.
But even Reliance’s worst detractor cannot ignore four simple facts: it has created a massive asset base in the fastest possible time; it has produced successful plants on truly global scales; its costs are internationally competitive in the truest sense of the term; and that has given it consistent long-term value to 2.6 million shareholders. No company can beat that. Not yet, anyway.
Mukesh: Reliance will get listed on Wall Street because we want to benchmark ourselves with the top 100 companies of the world.
Anil: The skills we built in the chemical industry we are repeating in telecom. Our costs are far lower than any other telecom company in India. Investors are applauding our telecom strategy - to pay the lowest possible licence fee and aim for the highest geographical spread. This will give us the ability to innovate in marketing and tariffs. We are not going to have 30 telecom operators in India. There will be a shakeout. Nearly 20 licences, including HFCL’s, are up for sale. If the rules of the game change, then Reliance will be in the frontline buying some of them out.
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Thanks for digging this out. Times change, busines models change but the DNA of the Company remains. Credit to Reliance for maintaining their DNA and maintaining their success rate in their major business expansions.
Even today, Reliance is taking India to the world.
I would say this is a must read for every Reliance investor.
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What happens to the RIL shareholders (INDIAN) if JIO lists on say the Nasdaq??