Reliance's first bonus issue in 7 years: Analyst insights and key takeaways for investors

Reliance Industries Limited (RIL), India’s largest conglomerate, is set for its first bonus issue in seven years, setting October 28 as the record date, just in time for Dhanteras. 

The 1:1 bonus issue means that Reliance will allot one fully paid-up equity share of ₹10 face value for each share held, offering a festive boost to investors as Diwali kicks off.

Ahead of the record date, Reliance’s stock closed at ₹2,655.45 on October 25, positioning the company’s market cap at ₹17.96 trillion. While the stock dipped nearly 3% this week, it has climbed 2.5% year-to-date. 

Brokerage Geojit reiterated its BUY rating with a target price of ₹3,034, noting the potential for strong festive-driven demand in Reliance’s retail and digital businesses. “Reliance’s diversified portfolio positions it well to capitalize on the holiday season,” commented a Geojit analyst.

This bonus issue is Reliance’s sixth overall and first since 2017, extending a tradition dating back to 2009, when the company issued its first 1:1 bonus. 

RIL will capitalize the bonus shares from its securities premium account, general reserves, or retained earnings, reflecting its solid balance sheet and commitment to shareholder value.

Analysts maintain a positive outlook on Reliance’s growth trajectory. Prathamesh Masdekar, Research Analyst at StoxBox, noted the retail segment as a pivotal growth area: “Reliance’s retail operations are rapidly scaling, reinforcing its industry-leading momentum. The bonus issue should drive added investor interest, especially as the company strengthens its retail segment ahead of Diwali.” Masdekar also emphasized Reliance’s resilience, stating, “The company is adept at navigating short-term challenges and remains a compelling long-term investment.”

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, recommended RIL as a long-term portfolio pick, asserting, “Reliance offers consistent returns. Investors buying post-bonus can still anticipate strong growth.”

Adding to the bullish sentiment, G. Chokkalingam, Founder of Equinomics Research, identified Reliance as a prime investment: “With its proven record of building resilient businesses, Reliance is well-positioned to create wealth, especially with growth potential in telecom, retail, and oil segments.”