India's largest company, Reliance Industries (RIL) traded volatile and leaned closer to a bearish trend during the trading session of September 30th to October 4th, ahead of its bonus issue. Reliance has opened a window for investors who hold partly paid-up equity shares. The last date for these investors to become eligible is October 7. There is room for buy-in BUY/ADD in Reliance stock, especially after its 7% decline in the latest week.
Reliance Industries Share Price:
After market hours of October 4, Reliance stock finished at Rs 2,773.80 apiece, down by 1.47% on BSE. The company's market cap stood a Rs 18.76 trillion.
The overall weekly performance of Reliance was volatile. After a brief surge to near Rs 3,050 levels on September 30, Reliance stock corrected significantly in the first four trading sessions of October. Overall, from September 30 to October 4, Reliance stock plunged by at least 7.3% on BSE.
Reliance's monthly performance is also a decline of over 7%. The latest downfall has squeezed in Reliance's gains overall in 2024. YTD, the stock is now up by 7%, compared to its gains of over 13% as of October 1, 2024.
Reliance stock is in focus ahead of its bonus issue ratio.
Reliance Industries Bonus Issue:
Earlier in September month, Reliance received board of directors approval for forfeiture of partly paid-up equity shares on which call money (First Call or Second & Final Call or both) remains unpaid.
That is why, Reliance announced that the forfeiture of the said partly paid-up equity shares will be effected in case the payment of call money along with interest. Thereby, failure to pay for the partly paid-up equity shares up to October 7, 2024, will lead to confiscation of the shares by the company.
If the payment of call of money and making the partly paid-up shares fully paid-up entitles you to the following benefits as per RIL's filing: Bonus shares in the ratio of 1:1; and Equity shares of Jio Financial Services Limited which are currently lying with JFSL Trust - PPS (RIL).
Reliance will reward 1 free equity share to eligible shareholders who are holding 1 fully paid-up equity share.
It needs to be noted that October 7th is the record date only for the investors who are currently holding partly paid-up shares. It is a chance for them to convert these partly paid-up shares to fully paid-up.
The main record date to be eligible for bonus shares is yet to be announced. And speculation is that the record date could be before Diwali since Reliance announced that its bonus issue will be an early Diwali gift.
In August month, RIL said, "This will be the largest-ever issuance of bonus equity shares in the Indian equity market. The issuance and listing of bonus shares will coincide with the upcoming festive season in India and will be an early Diwali Gift to all our esteemed shareholders."
BUY/SELL Reliance Stock:
CLSA has recommended BUY on Reliance. The global broker has set Rs 3,300 target price, hinting at a potential 13% upside ahead. CLSA predicts Reliance's PE ratio at 27.1% by the end of FY25 and at 23.3x by FY26, while the PB ratio is seen at 2.3x by FY25 and 2.1x by FY26. The return on equity is seen at 8.8% in FY25-end and 9.5% in FY26.
Meanwhile, brokerage Kotak Institutional Equities has suggested ADD with a target price of Rs 3,200.
Further, Antique Stock Broking has suggested HOLD on RIL for a target price of Rs 3,194.
Notably, Morgan Stanley has maintained Overweight on Reliance, with a target price of Rs 3,416. The outlook is positive. The highest target price on Reliance is set by BOB Capital Markets at Rs 3,585 with a BUY recommendation.
Overall, as per Trendlyne data, the consensus recommendation from 37 analysts for Reliance Industries Ltd. is BUY. EPS is expected to grow by 13.6% in FY25.
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