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Reliance Industries' 1:1 bonus issue: Here’s what it means for RIL investors
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3 min read | Updated on August 30, 2024, 15:12 IST
SUMMARY
India’s most valued conglomerate is considering a bonus issue on September 5. Over the years, Reliance Industries has issued bonuses four times, with 1,000 shares held in 1983 growing to 12,800 shares. With the announcement of a fifth bonus issue, those 1,000 shares from 1983 would increase to 25,600 shares. Here’s a detailed history of Reliance Industries' bonus shares.
Stock list
The 47th AGM of Reliance Industries Ltd was held on Thursday, August 29
The oil-to-telecom conglomerate plans to consider 1:1 bonis issue at its upcoming board meetings.
Reliance Industries Limited (RIL) is India's largest company by market cap with operations in hydrocarbon exploration, petroleum refining, petrochemicals, renewables, retail, telecom and digital services. Its diversified product portfolio includes petroleum products, polyester, plastics, chemicals, synthetic textiles, and fabrics.
Bonus history and analysis
Reliance Industries, India's most valued company has issued bonuses 4 times. The oil-to-telecom conglomerate annouced first bonus issue in October 1983. The company has declered 1:1 bonus on three occasions (that means for every share held, shareholders would receive an additional one share). Meanwhile, in 1983, Reliance Industries also annouced 3:5 bonus (that means for every 5 shares held, shareholders would receive an additional 3 shares). The last bonus issue was announced in September 2017.
To give you an example. In 1983, if a person held a quantity of 1,000 shares pre-bonus (at the beginning) and the person would have remained idle (no selling or additional buying) that would have turned into a quantity of 12,800 shares today.
| Bonus date | Bonus ratio | Record date | Ex-bonus date | Bonus shares received | Total quantity held |
|---|---|---|---|---|---|
| At start of 1983 | 1,000 | ||||
| 28-10-1983 | 3:5 | 30-11-1983 | - | 600 | 1,600 |
| 13-09-1997 | 1:1 | 29-11-1997 | 27-10-1997 | 1,600 | 3,200 |
| 07-10-2009 | 1:1 | 27-11-2009 | 26-11-2009 | 3,200 | 6,400 |
| 21-07-2017 | 1:1 | 09-09-2017 | 07-09-2017 | 6,400 | 12,800 |
As we can observe from the above tables, the potential for wealth creation through bonus shares becomes evident for long-term investors as the investor's holding quantity continuously increases due to bonus issues.
Long term investors who may have brought 1000 shares of Reliance Industries in 1983 is now worth ₹3.92 crore as of August 29 after accounting for the all the bonus issue (12,800 share x ₹3,068 per share).
Further with the company up with its 5th bonus issue with a 1:1 bonus issue (for every share held one additional share), the quantity held by a investors of 1,000 shares would multiply into 25,600 shares.
If the company’s board approves the 1:1 bonus issue on September 5. Investors will have 25,600 shares worth ₹7.85 crore.
Reliance Industries share price climbed more than 2.5% intraday shortly after the company announced that the its board will consider issuing 1:1 bonus shares on September 5.
Through the upcoming bonus issue, RIL will equate with Hindustan Petroleum Corporation (HPCL), Wipro, Infosys and GAIL for a record 5 times bonus issue in their history. Reliance Industries' bonus issue over the years has multiplied share quantity by over 11.8 times until today since the first bonus. However with the 5th bonus issue this year the quantity should be multiplied 25 times since 1983.
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