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Stocks

Reliance Power Bonus at 3:5

So the bonus is here. 3:5 it seems, so if you own five shares, you will soon get 3 more. When? I don’t know, they haven’t announced the record date yet.

How does this work? If promoters don’t get the extra shares then the 10% they have diluted effectively becomes 16%. The share price, and importantly the price of the futures, should adjust only 6% more no? We’ll have to wait and see.

  • enagar.com says:

    >r u drunk?
    16/106 is 15.1% not 16%

    also you calculations about futures are all wrong

  • Deepak Shenoy says:

    >you’re right – it’s 15.1% – I made a rough back of the hand calc.

    Futures – I don’t know how the exchange adjust the price, it looks like it will end up being 38% lower as dictated by market. Still, it’ll be interesting to see, this is a first.

  • Ravi Sankar says:

    >Hi Deepak,
    I have a small doubt. If a person have 17 RPow shares and the other guy have say 18 RPow share. Both of them will get 9 bonus shares each. What happens to the other 3 bonus shares(accounting for remaining 2+3 shares) ??

  • Deepak Shenoy says:

    >ravi: the odd lots will be consolidated across all shareholders, and the extra shares (which are all fractionally owned) will be sold. The resulting amount will be proportionately credited to each shareholder – you should see a cheque for this in a few months.

  • Srinivasan says:

    >Since the record date is yet to be announced what happens if somebody buys 3 more shares(after bonus was announced) along with their 17 shares and has a total of 20 shares. Do they get 12 shares and also the proportional credit you talked about or do they just get 9 shares based on the original allotment and the proportional credit?

  • Deepak Shenoy says:

    >srinivasan: if you hold 20 shares on the record date you will get the 12 shares. The original allotment is not considered, only the holding on the record date.

  • Anonymous says:

    >This is just hogwash by Reliance. Funnily only in the Indian markets shares move up on a ‘bonus’ announcement even when the total value of the company stays the same. It has always happened. I doubt if Reliance will issue bonus shares only to the allottees of the IPO – they will also issue the bonus shares to the promoters too, so those who held 10% of the company will still hold only 10%. A scheme to create value from paper, it would be better if they focused on implementing their projects in time and under budgets instead of these gimmicks.