Reliance Industries Rights Entitlement shares command 7% premium over intrinsic value on Day 4

Mumbai: The de-materialised trading of Reliance Industries Ltd - Rights Entitlement (RIL-RE) continued to draw strong demand on day four on Tuesday with an average premium of more than 7 percent over the intrinsic value. While oil-to-telecom behemoth RIL’s Rs 53,125 crore mega rights issue opened for subscription by shareholders last week, it became the first issue where eligible shareholders got the rights entitlements (REs) in demat, which could be traded on stock exchanges. RIL-REs on an average commanded a premium of Rs 12.07 on Tuesday, over 7 percent premium over the intrinsic value, according to stock exchange data. At a time when marquee companies like Bharti Airtel and Kotak Mahindra Bank are selling their equity stakes at 5-6 percent discount to their market price, RIL’s RE continues to command a premium over its intrinsic value. The volume-weighted average price (VWAP) of RIL-REs stood at Rs 183.75 on Tuesday. RE’s intrinsic value is the difference between RIL share price and the rights issue price of Rs 1,257. At RIL’s VWAP of Rs 1,428.70, the RE’s intrinsic value works out to Rs 171.10 on Tuesday (the difference between Rs 1,428.70 and Rights Issue price of Rs 1,257). In total 1.57 crore RIL-REs changed hands on NSE and BSE on Tuesday, with a traded value of Rs 288.5 crore, the data showed. Over Rs 1,290 crore of RIL-REs have traded on stock exchanges in the first four days of listing, notwithstanding the fact that it is listed in the Trade-to-Trade segment and buyers must take delivery of the REs. Nearly 6.7 crore RIL-REs have traded on stock exchanges in the four trading sessions of listing. This is more than 15 percent of the total REs issued (42.26 crore). RIL-REs is the first rights entitlement ever traded on stock exchanges. In the rights issue, the company will offer one share for every 15 shares held at Rs 1,257 per share. This will be the first issue where the rights entitlements will be credited to eligible shareholders’ demat accounts and will be freely tradable. (Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Firstpost)