Thursday, October 8, 2009

 

RIL board approved 1:1 bonus issue

Reliance Industries has informed BSE that the Board of Directors of the Company at its meeting held on October 07, 2009, inter alia, has recommended, subject to the approval of the shareholders, issue of Bonus shares in the ratio of one equity share of Rs 10/- each fully paid up for every one equity share of Rs 10/- each of the company.
India’s largest private sector refiner has issued bonus shares after 12 years. The last time it issued 1:1 bonus was on September 13, 1997.

Further, the Board has declared a dividend of Rs 13 (Rupees thirteen only) per fully paid-up equity share of Rs 10/- each.

Reliance Industries declared its audited FY09 results, including Reliance Petroleum’s (RPL) numbers. The company’s consolidated net profit was at Rs 15,296 crore versus Rs 19,523 crore. Its consolidated net sales were at Rs 1.51 lakh crore versus Rs 1.37 lakh crore.

Commenting on the bonus issue SP Tulsian of sptulsian.com said the announcement came as a welcome surprise. He said that the move was a calculated one. “The Reliance family has about four million share holders of which 3 or 3.5 million are common shareholders. I think this is the capitalizing on winning the confidence of the RIL shareholders family because this is now the support mobilization at all levels by both the brothers whether this is the shareholders or of the bureaucracy or the judiciary or maybe analysts etc, so basically this seems to be a calculated move on the part of RIL that okay this has been due or a long overdue demand so lets award them with 1:1 bonus.”

Jigar Shah Senior Vice President at Kimeng Sec India said given that this year was a consolidation year for the company as earnings from its refining business were lower and the company’s overall earnings growth would be subdued, the bonus was a good incentive for share holders to retain their shares and reward share holders who have been with the company for the longer term. He said that the stock would now see a shorter term boost however, he added, “I don’t think this will have any more than temporary sentiment impact.”

“We are maintaining our target of Rs 2050 for the year and we will review it after the Q2 earnings and also what happens with the ongoing case.”

Amitabh Chakraborty, President – Equity, Religare Securities said the 1:1 bonus was totally unexpected. “In my mind, what has happened is that there was a negative sentiment attached to the treasury stock sale because normally that gives negative signals. But now this is a positive signal. Bonus is always taken very positively by the retail side of the market. So, I think this bonus announcement will compensate and I think retail will be quite enthused with this bonus issue.” He expects the market to be enthused by the news in trade tomorrow.

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