RIL mcap at all time high of Rs 10.5 lakh crore as rights shares make strong debut

RIL share price gained 1.65 per cent on Monday, to its all-time-high close of Rs 1615 on BSE and Rs 1,614.55 on NSE, in an otherwise weak market conditions as both the market benchmarks BSE Sensex and Nifty-50 lost 1.6 per cent.

The partly paid rights shares made a strong debut listed separately under RELIANCEPP symbol started trading at Rs 690, briefly touching upper circuit of Rs 710.65 and closing with 8 per cent gains at Rs 700.1 on NSE.

The partly paid-up shares in themselves created over Rs 29,500 crore of market value. In addition to the market capitalisation of fully paid-up shares at Rs 10.22 lakh crore, RIL's total market capitalisation now stands at an unprecedented Rs 10.51 lakh crore.

The partly paid-up shares, for which shareholders have paid Rs 314.25 each, have generated 122.8 per cent returns within just a fortnight to become by far one of the best investments in Covid times.

Even the investors, who bought the Right Entitlements in online trading for Rs 220 apiece and then paid Rs 314.25 to the company for the rights shares have made over 30 per cent gain on their investment within a fortnight.

The RIL's partly paid-up Rights share traded at a premium to their intrinsic valuation throughout their debut session.

The shares need owners yet to pay Rs 942.75 to become fully paid-up shares (Rs 1257 issue price -- Rs 314.25 already paid). Their intrinsic value is the current market price of RIL's fully paid up share reduced by the amount yet to be paid (or Rs 942.75).

On Monday, RIL scrip traded at volume-weight adjusted price (VWAP) of Rs 1,593.39, which put the intrinsic value of the partly paid shares at Rs 650.64. As against this, the VWAP of the partly paid shares stood at Rs 688.73 -- or an average premium of Rs 38.09 or 5.9 per cent.

It may be mentioned that RIL's Rs 53,124 crore Rights Issue was India's largest ever rights issue. It was also the world's largest rights issue by a non-financial institution in the last 10 years.

It was announced on April 30, 2020 and the listing of the rights shares took place on June 15 -- a period of just 45 days, defying the constraints of the Covid-induced lockdown.

Under the rights Issue, Reliance issued 42.26 crore new shares at Rs 1257 each to existing shareholders in 1:15 ratio. The investors had to pay 25 per cent or Rs 314.25 per share at the time of application and will need to pay another 25% or Rs 314.25 in May 2021 and remaining 50 per cent or Rs 628.5 in November 2021, when the shares will turn into fully paid-up.

In spite of its magnitude and challenging economic outlook, RIL's rights Issue closed with 59 per cent oversubscription -- a commitment of over Rs 84,000 crore from investors.

The issue generated interest globally with FPIs using the opportunity to increasing their investment in the company. The number of FPIs holding RIL shares increased to 1,395 on June 11, 2020, from 1,318 on March 31, 2020. Now they together hold 24.15 per cent in RIL, up from 23.48 per cent at end March 2020.

RIL completed the allotment of partly paid-up shares to the demat accounts of its shareholders on June 11.

On the expanded post issue equity of 676.2 crore equity shares, the promoter group's stake now stands increased to 49.14%, from 48.87 per cent at end March 2020. This underlines the promoters' confidence and commitment to the company's future growth.