Reliance Industries: Bonus cheer

The stock of Reliance Industries (RIL) went ex-bonus last week. The 1:1 bonus issue seems to have been driven by, among other factors, the 50 per cent rally in the stock this calendar. This saw its price cross the ₹1,500 mark a couple of months back and go up further since. Post bonus, the stock now trades at ₹817, making it optically more accessible to the small investor.

Bonus announcements, though accounting adjustments, are often perceived as rewards to shareholders. The market cheers them on, as it did when RIL announced its bonus issue at its July 22 annual general meeting; the stock went up 4 per cent that day and is up a further 3 per cent since then.

Of course, the rally is also thanks to the company’s solid performance in its key refining and petrochemicals segments, and rising confidence in its telecom business. The company’s profit (before exceptional items) grew 19 per cent in 2016-17 and 13 per cent y-o-y in the June 2017 quarter.

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