What is Reliance rights issue and how to Apply?

Billionaire Mukesh Ambani-owned Reliance Industries mega rights issue opened on May 20 for subscription for existing shareholders The company proposed to raise Rs 53,125 crore through its biggest ever rights issue which will close on June 3, 2020, while the ratio is one rights issue share for every 15 equity shares held by existing shareholders as on record date (May 14).

If you had Reliance Shares as of 14th May, you are entitled to apply for the Rights too. This entitlement is currently shown in your demat account.

There is no max limit.

You can apply for any number of shares in this issue.

Up to entitled shares are guaranteed allotment for you (i.e. your rights entitlement based on 1 for every 15 shares currently held).

Anything more than entitled shares will be decided by company if you apply for more shares.

If you don't want to apply for these rights share, then u can sell your rights entitlement in stock market also just like any other stock.

The price of this - if u want to sell in stock market will be available from 20th May i.e. today.

Rights opened today at Rs 152 and currently traded at around Rs 192

Following is the price chart of Reliance Rights on day of issue

Similarly, if you want more of these right’s entitlement, you can buy from stock market as these rights are being traded on exchange. If you buy another 100 of these right’s entitlement from stock market then u will have total guaranteed allotment of 100 in rights

Rights shares will be allotted at Rs. 1257/- per share.

Out of this 25% has to be paid now i.e. Rs. 314.25 per share has to be paid now at the time of application

The balance will be paid in two future instalments. Expected 25% i.e. another 314.25 Rs per share in May 2021 and 50% i.e. Rs. 628.5 in Nov 2021 on call by the company at relevant time

According to an analysis by Kotak Investment Bank, In cases of rights entitlement renunciation in the issue of Reliance Industries Limited (RIL), a buyer should pay the seller a theoretical fair value range between Rs 202 to Rs 245 for a fully paid rights entitlement.

Link - https://www.hindustantimes.com/business-news/a-buyer-should-pay-rs-202-245-for-reliance-rights-entitlement-renunciation-report/story-rYkH9BnAY0pm8f497wDbZK.html

Now how to apply for these rights

There are 3 methods

Two are online and one is offline method. We will discuss each of these methods below. See what is more suitable for you and use that to apply

First Method - Online Method 1 – From your internet banking account.

(a) Log in to your own online bank account

(b) It will have option to invest in IPO/Rights - if your bank has enabled it

(c) In that it will show these Reliance Rights apply button

(d) u will have to fill basic details of your folio, number of rights shares you want to apply etc.

(e) In this method, no amount will be debited from bank. However, for every share applied, you have to block 314.25 per share in the bank. This process is online ASBA

(f) You bank may want you to enable ASBA online, if not done already

(g) On allotment, amt will be debited in your bank depending on the number of shares you are allotted. Till then this money stays in your bank account but is blocked.

Method 2 - Online Thru RTA website

(a) Go to this website https://rights.kfintech.com

(b) Here click on the tab - Apply for Rights issue thru RWAP.

(c) Only for Resident investors. NRIs cannot use this

(d) It will then ask for basic details like PAN, DP ID, Folio no etc. You will have to fill this online and then u have to make payment. Either thru Net banking or thru UPI. No other payment method is allowed Remember in UPI there is limit of 2 lacs

e) In this method money will be debited from your bank immediately i.e. 314.25 for every share applied. Balance Refund amount if any, will be refunded back to your bank later by the company in case you are allotted lesser than shares applied for.

Method 3 - Offline Method – By filling Form

(a) Download application form (Form is in your email or you can also download this form from above website

(b) Print and Fill this form - name, PAN, Demat details, number of shares to apply, Bank account details

(c) Sign this filled form and submit it to physically to your Bank Branch

(d) 60 Banks are available in this. Check if your bank is available. You can check here on SEBI website https://sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=35…

(e) No Cheque has to be attached

(f) This is Offline ASBA. Bank will block these funds i.e. 314.25 per share applied - in your account

(g) Once rights are allotted, then amount debited from your bank