Reliance Approves Historic 1:1 Bonus Issue Amid Mixed Q2 FY25 Results

Mukesh Ambani’s Reliance Industries Limited (RIL) has approved a highly anticipated 1:1 bonus share issue, offering shareholders one additional fully paid-up equity share for every ₹10 share they own. 

This will be the largest bonus share issue in India’s stock market history, aligning with the festive season and being described as an “early Diwali gift” to shareholders. However, the exact record date for the bonus issue has not yet been confirmed, though it was initially expected during the October 14, 2024, board meeting.

Delays in Record Date Announcement

Despite expectations that Reliance would announce the bonus issue record date on October 14, the company delayed the decision. This is because some investors holding partly paid shares of Reliance requested additional time to pay the remaining amounts and convert their shares into fully paid ones. 

As of March 2024, there were 4.17 lakh partly paid shares held by non-institutional investors. The deadline to pay the outstanding call money was extended to October 7, 2024. Once this process is complete, RIL will reconcile payments, cancel partly paid shares, and issue fully paid shares before announcing the bonus issue record date.

Financial Performance: Mixed Outlook

For Q2 FY25, Reliance reported mixed financial results. Its consolidated net profit fell by 4.8% year-on-year to ₹16,563 crore, but this improved over the previous quarter’s ₹15,138 crore. Revenue increased slightly by 0.8% year-on-year, reaching ₹2.58 lakh crore.

• Oil-to-Chemicals (O2C): This segment, a major revenue driver for Reliance, has been facing challenges. EBITDA is expected to fall by 26-27% to ₹14,100 crore due to weaker refining margins, particularly the sharp 62% drop in Singapore refining margins.
• Retail and Jio: Despite challenges in O2C, the retail and telecom (Jio) segments are showing steady growth. Retail EBITDA is projected to grow 7-10% year-on-year, while Jio’s EBITDA is expected to increase by 12% annually, driven by recent tariff hikes and a stronger subscriber base.
• Oil and Gas: This segment reported an 11% growth in EBITDA, benefiting from higher volumes.

Future Outlook

Reliance is undergoing significant transformation as it diversifies into new businesses. Key areas to watch include:

• New Energy Business: The company is making a ₹75,000 crore investment in its new energy segment.
• Retail Expansion: Continued growth in its retail division.
• Telecom Pricing: Developments in pricing strategies for its telecom business (Jio) could further bolster growth.

While Reliance is facing challenges in its core O2C segment, its consumer-facing businesses are expected to continue performing well, making it a long-term prospect for investors.

On October 16, Reliance Industries Ltd’s share price opened at ₹opened at ₹2,680.00, touching the day’s high at ₹2,706.00 as of 12:31 PM on NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.