Mukesh Ambani-led Reliance Industries (RIL) announced on Thursday that its board has approved issuing bonus shares at a 1:1 ratio.
This means shareholders will receive one additional share for every share they currently own. The announcement was made during the company’s annual general meeting (AGM).
The date for determining which shareholders will receive the bonus shares will be announced later. The shares will come from the company’s securities premium account, general reserve, or retained earnings as of March 31, 2024. As a result, RIL's authorized share capital will rise from Rs 15,000 crore to Rs 50,000 crore.
The exact number of bonus shares issued will depend on the number of fully paid-up shares on the record date.
Following the announcement, RIL's shares fell by 1.3% to Rs 2,989 on the BSE. The stock has had flat returns over the past six months and has lagged behind the Nifty index.
At the AGM on August 28, Ambani mentioned that the bonus issue is part of Reliance’s strategy to reward investors. He said the company’s growth benefits shareholders and is aligned with their goal of enhancing wealth and quality of life in India.
For RIL shareholders, this bonus issue means that if they own 1,000 shares, they will receive an additional 1,000 shares, totaling 2,000.
Although the number of shares will double, the overall value remains the same since the share price will adjust accordingly.
Bonus issues often improve a stock’s liquidity by increasing the number of shares available for trading.
Amit Goel, Co-Founder & Chief Global Strategist at Pace 360, explained that while the immediate share price impact might be neutral, the increased liquidity and future potential for value growth show the company's financial strength and commitment to its shareholders.
