1:1 Bonus By Largest Oil & Gas Stock, DON'T Miss This Date In Oct Before Diwali: Rs 4,600 Target On Reliance

Reliance Industries share price has been in focus since the announcement of its bonus issue which is an early Diwali gift to its shareholders. India's largest company and largest oil and gas stock is set to reward investors with 1:1 bonus issue. And Reliance wants maximum number of shareholders to benefit from it. That is why, Reliance has extended its deadline for those investors who are yet to pay for call money on partly-paid up shares. Its not bonus issue reward, by converting partly-paid shares to fully-paid, investors are bound for a host of benefits.

Reliance Industries (RIL) Share Price:

After hitting Rs 3,000 mark on Septeber 24, Reliance stock ended at Rs 2979.25 apiece, down marginally by 0.31% on BSE. The market cap of the company is at Rs 20,15,705.65 crore.

Reliance's weekly gains is nearly 1%, however, its monthly performance is down by 1.5%. YTD, the stock is up by 15%. In a year, Reliance gives 27% returns.

But in the long-term, Reliance emerges as a multibagger with gains of 148.98%.

Reliance Industries Bonus Issue:

As per the latest note, the company has sent notice to shareholders who hold partly paid-up equity shares, to make the payment on or before the deadline, to avoid forfeiture of the shares.

RIL said, it has received a good response and a few holders have requested a short extension of time. Hence, the last date for payment of unpaid call money has been extended to Monday, October 7, 2024, and no further extension of the date of payment will be granted. Earlier, the due date was September 20, 2024.

Paying for the call money and making the partly paid-up equity shares fully paid-up, will allow investors to be entitled for the following benefits:

- Bonus shares in the ratio of 1:1.

- Equity shares of Jio Financial Services currently lying with JFSL Trust - PPS (RIL).

- Avoiding forfeiture of the amount already paid and gaining the embedded value of shares.

How do I make the payment? As per RIL's statement, the payment of the call money can be made by any one of the following modes:

- R-WAP portal (https://rights.kfintech.com/callmoney)

- demand draft to be sent to KFin Technologies (Unit: Reliance Industries Limited), Hyderabad, along with duly filled up Payment Slip and Notice of Forfeiture.

Reliance's bonus issue is the largest-ever issuance of bonus equity shares in the Indian equity market. RIL is planning to reward bonus shares as an early Diwali gift.

Reliance has announced a bonus share of 1:1 ratio meaning 1 free share fully paid-up on existing 1 fully paid-up equity share. Data from RIL showed that this is the sixth bonus issue since its IPO and the second in this Golden Decade. RIL said the bonus issue is a testimony to Reliance's continued commitment towards rewarding shareholders during the Golden Decade from 2017 to 2027.

BUY Reliance Stock?

After Reliance's AGM, JM Financial reiterated BUY on Reliance with a target price for 12 months unchanged to Rs 3,500, and for 3 years to Rs 4,600.

JM believes RIL's capex and net debt peaked in FY24 and is likely to decline gradually with moderation in capex (to INR 1.2trln-1.3trln p.a. vs. INR 1.3 trn in FY24 and INR 2.3trln in FY23); but, importantly, capex will also be fully funded by a gradual increase in internal cash generation. Further, the company highlighted in its FY24 annual report that it will continue to monitor financial markets to seize suitable opportunities for capital-raising to support its growth plans.

JM's note added, "Be that as it may, we believe RIL could still drive a robust 16-17% EPS CAGR over the next 3-5 years with Jio's ARPU expected to rise at ~11% CAGR over FY24-28; ARPU is on a structural uptrend given the consolidated industry structure, higher ARPU requirement to recover significant 5G capex and the need to avoid a duopoly market."

Moreover, it added, " Retail EBITDA is expected to grow at 20-25% on continued strong growth momentum as RIL is driving omni-channel capabilities across segments. Further, listing of Jio and Retail business over the next few years could lead to a potential re-rating. At CMP, the stock is trading at 22.2x (3 yr avg: 24.4x) and EV/EBITDA of 11.4x (3 yr avg: 12.8x). Key risks: a) high capex in New Energy business, resulting in rising net debt with limited earnings visibility from new projects; b) weak subscriber addition and limited wireless tariff hike; and c) weak downstream margins due to macro concerns."

Reliance is India's largest private sector company, with a consolidated revenue of INR 10,00,122 crore (US$ 119.9 billion), cash profit of INR 1,41,969 crore (US$ 17.0 billion) and net profit of INR 79,020 crore (US$ 9.5 billion) for the year ended March 31, 2024.