Reliance Industries, a prominent player in India’s oil and gas sector, has made headlines with its announcement of a 1:1 bonus share issue, marking its first such issuance since 2017. This move is anticipated to reward shareholders significantly, especially as it aligns with the festive season, providing what many are calling an “early Diwali gift.”
Bonus Share Announcement Details
The bonus share issuance means that for every fully paid-up share held by an investor, they will receive an additional share of equal value. This decision was made during the company’s annual general meeting on August 29, 2024, and was subsequently confirmed by the board. The last time Reliance issued bonus shares was in September 2017, when its stock price was approximately ₹700. Since then, the stock has more than quadrupled in value, reflecting the company’s robust growth trajectory.
Financial Performance Insights
Despite the excitement surrounding the bonus shares, Reliance’s recent financial performance has raised some concerns. In its Q2 results for FY2025, the company reported a net profit of ₹16,563 crore, which represents a decline of 4.8% from the previous year. The oil-to-chemicals (O2C) segment has been particularly affected by lower gross refining margins (GRMs) and challenges within the retail sector. Analysts predict that while O2C may struggle, segments like Jio and retail are expected to show strong growth in the upcoming quarters.
Record Date Anticipation
Investors are eagerly awaiting the announcement of the record date for the bonus share issue. Initially expected to be revealed during a board meeting on October 14, no details were provided regarding this date. The delay has been attributed to requests from investors holding partly paid shares who needed additional time to convert these into fully paid shares. Reliance had previously set October 7 as the deadline for this conversion.
Market Outlook and Analyst Recommendations
Market analysts remain optimistic about Reliance’s long-term prospects despite short-term challenges. Brokerage firms such as JM Financial have reiterated a “BUY” recommendation for Reliance stock with a target price of ₹3,470. They highlight expectations of substantial earnings growth driven by improvements in Jio’s average revenue per user (ARPU) and continued expansion in its retail business.As Reliance Industries moves forward with its plans for bonus shares and navigates its financial challenges, investors are advised to stay informed about upcoming announcements regarding the record date and overall market conditions.Disclaimer: This article is intended for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a financial advisor before making investment decisions.
