Reliance Industries’ rights entitlement commands 7% premium on Day 4

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% over the intrinsic value.While the oil-to-telecom behemoth RIL’s ₹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 the stock exchanges.RIL-REs, on an average, commanded a premium of ₹12.07 on Tuesday, over 7% premium over the intrinsic value, according to stock exchange data.At a time when marquee companies such as Bharti Airtel and Kotak Mahindra Bank are selling their equity stakes at 5-6% 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 ₹183.75 on Tuesday. RE’s intrinsic value is the difference between RIL share price and the rights issue price of ₹1,257.At RIL’s VWAP of ₹1,428.70, the RE’s intrinsic value works out to ₹171.10 on Tuesday (difference between ₹1,428.70 and the rights issue price of ₹1,257).In total, 1.57 crore RIL-REs changed hands on NSE and BSE on Tuesday, with a traded value of ₹288.5 crore, the data showed. Over ₹1,290 crore of RIL-REs have traded on the 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.Almost 6.7 crore RIL-REs have traded on the stock exchanges in the four trading sessions of listing. This is more than 15% of the total REs issued (42.26 crore).First tradable RERIL-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 ₹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 tradeable.

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