Rewarding shareholders has been central to Reliance Industries’ investor expectation strategy, and its plans to announce a bonus issue—its fifth since inception—are in keeping with that.
During market hours and just a little before its 47th annual general meeting, the company announced that its board would meet on September 5 to consider issuing bonus shares in the ratio of 1-for-1 by capitalizing its reserves.
“When Reliance grows, we reward our shareholders handsomely,” said Chairman and Managing Director Mukesh Ambani, referring to the bonus announcement at the AGM.
“And when our shareholders are rewarded handsomely, Reliance grows faster and creates more value. This virtuous cycle has been the guarantor of your company’s perpetual progress.”
The conglomerate announced its first bonus issue in 1983, then in 1997. In recent years, it issued bonus shares in 2009 and, more recently, in 2017, both of them in the ratio of 1-for-1.
The company’s shares have risen over 38 per cent from the low of ₹2,221 in October 2023, and so far in 2024, they have risen about a fifth. On Thursday, they went to an intra-day high of Rs 3074 before coming off the highs to end 1.6 per cent higher at Rs 3042.90 on the NSE.
“Reliance as a conglomerate has consistently rewarded its shareholders by offering these bonus opportunities as they believe in long term growth and value of both the investors and the company to achieve success,” said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360.
“The announcement of a bonus share issue by RIL has been positively received by the market. It is a sign of the company’s financial strength and its commitment to returning value to shareholders. The increased liquidity and potential for future value appreciation are likely to outweigh any negative impact on the share price,” he added.
Marketmen observed that stocks rallied towards the end of the trading session due to RIL and the bonus announcement. “ Markets were volatile and had slipped into the red in mid-session, but rebounded in late trades as investors cheered the bonus issue announcement by RIL in its AGM which led to buying action in other select frontline stocks,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.