Last day for buying, selling RIL-Rights Entitlement, shares surge 48% from May 20; should you buy today?

From an opening price of Rs 152 on May 20, Reliance Industries' rights entitlement (RIL-RE) share price has surged 48 per cent to hit today's high of Rs 225 apiece on NSE.

Reliance Industries’ rights entitlement (RIL-RE) shares fell as much as 8.5 per cent to Rs 210 apiece on NSE in the afternoon deals on the last day of buying or selling the rights entitlements on NSE and BSE. India’s biggest-ever rights issue trading started from May 20. From an opening price of Rs 152 on May 20, RIL-RE share price has surged 48 per cent to hit today’s high of Rs 225 apiece on NSE. Market regulator Sebi introduced Rights entitlement (RE) platform earlier this year. With Rs 53,125 crore mega rights issue which opened on May 20 for subscription by shareholders, Reliance Industries (RIL) became the first issue where eligible shareholders got the rights entitlements in demat, which could be traded on stock exchanges. Analysts seem to be upbeat on this rights issue and see it as an opportunity for the investors. “RIL-RE continues to draw attention amongst investors, with investors willing to pay a premium to subscribe in the rights issue as they have to make staggered payments in three instalments and the acquisition price remains fixed while at the same time, getting a chance to buy into the digital foray of Reliance,” Aamar Deo Singh, Head Advisory at Angel Broking told Financial Express Online. “This appears to be exciting for the markets in the current scenario,” Singh added.

Through this rights issue, RIL offered shares to existing investors in the ratio of 1:15 at a price of Rs 1,257 per share. The investors who wish to subscribe need not pay the entire amount in one go. The company has asked investors to pay only 25 per cent at the time of subscription. While out of the rest 75 per cent, investors will have to pay 25 per cent in May 2021, and the remaining 50 per cent in November 2021. These partly paid-up Rights Entitlement shares will be allotted and credited to eligible shareholders or investors by June 11 and listed on the exchanges on June 12, 2020.

Today is the last date of trading for RIL REs. “If one buys the REs they should apply for the rights shares by June 3rd when the application window closes,” Mohit Mehra, business analyst at Zerodha told Financial Express Online. “An investor who buys the REs but does not apply for the rights shares will lose all the premium he has paid to acquire the REs since the instrument will be extinguished and removed from the demat accounts,” Mehra further added.

As of 2.15 PM, RIL-RE shares were trading 3.57 per cent down at Rs 221.55 on NSE, which was Rs 16 higher than the spread between Reliance Industries share price of Rs 1,461.95 and rights issue of Rs 1,257.