Everything you need to know about Tata Consumer Products rights issue

Corporate actions Rights issue
21

So is there any category while applying for these shares.

Like, the rights holders will apply under the Right shares category and non-rights holders will apply under the additional shares category.

I had doubt about the additional shares because, it seemed as if it is nullifying the difference between a person holding 26 shares and a person holding less than that.

I understand that for a rights holder the allotment of rights shares are guaranteed, but the word preferential allotment makes it sound like the chances of allotment to such other share holders is also probable if not guaranteed.

22

holder of 26 shares is ASSURED 1 share minimum on application . he may get additional shares too . holder of less than 26 shares only has chance allotment /preferential allotment to the extent of max 1 share assuming rights issue get oversubscribed .

23

Am i right in assuming this

Allotting these additional shares will become possible because of the following 2 reasons.

  1. Due to fractional shares not taken into account

  2. Rights getting extinguished without transfer

24

yes you are right .

25

You have revived REs as you are a shareholder of the company. These REs, you can use these to apply for rights shares or sell in the market from August 5 to August 12.

These will show from August 5 as the REs start trading from then onwards.

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26

hi

i am a new user to buy re shares.
kindly let me know how many RE shares do i need to buy to apply for rights issue through bank
How many days do i need to hold it.
When can i sell it
If i sell the bought RE shares on 12th , will i receive link to apply through my bank

27

From your question i assume you are not a shareholder but want to buy RE from market .(1)RE will remain listed from 05 to 12 August 2024 (2) it will be settled as T group securities means once you buy say on 05 August you can only sell on or after 07 August (no intraday no btst) till 12 August (3) if you want to apply for rights shares you can do so till 19 August . (4)asba be it physical or online is the only option to apply (5) if you buy RE and do not take any of the above action within time frame , RE will expire with zero value after 19 August . (6) it WILL not be a case in this rights issue but in recent past there has been cases where rights issue failed hence buyer of RE had 100% loss.

28

is it a must to hold RE shares till august 19th to apply for rights issue through bank or can i buy and sell the entire quantity before 12th august and still be eligible to apply rights issue through my bank.

29

RE in your demat is must eod issue closing date to apply for rights issue. if you sell entire quantity of RE you should not apply . if applied application will be rejected . OR ELSE you can sell part by 12 .08 and apply remaining by 19.08 .

30

I don’t think the application will be rejected but will only be considered at the end instead of assured issue or preferential allotment.

31

If you apply in right issue but do not hold RE end of day issue closing date in your demat , your application will be rejected. you can not get shares in rights issue if you do not hold RE either by way of being a shareholder or purchased from market /off market .
you must hold minimum 1 RE to get allotment in rights issue.

32

HI All,
I have logged in HDFC netbanking and tried to apply Right Issue of tata consumer share but I am not seeing company name there. How to apply via HDFC netbanking . Can somebody please explain.

In my zerodha account RE share is already showing under my portfolio . I am new to RE share.

Regards
Ankur

2 Likes
33

I have the same query.

34

Hello, I have a quick question. If I have RE share and if I sell it in the market, I will get that fund in my account. Why would company give free fund? Example, even if I sell 1 share of TATACON-RE share, I will get roughly 370 Rs. Why would the company be giving this extra money? Am I missing something here?

1 Like
35

Same question.
The email zerodha sent:

These REs are available for trading only until 12-Aug-24. Once the rights issue concludes, any remaining REs will expire and removed from your holdings. To make use of your REs, you have two options: either sell the REs before the trading deadline or apply for the rights shares by 19-Aug-24.

I don’t want more shares. So, if I do nothing, its just a plain loss of 370 right? So, I should sell REs?

1 Like
36

rights issue application started from today . some banks might take a day to up date the same on online asba . it should reflect by next day . in very few cases some banks do not provide online asba for some issue . in such case you need to do physical asba or sell your RE .
*AND there are some banks which are not asba compliance . if you deal only with those banks you can not apply rights .

37

EX Rights price on ex date get proportionately adjusted from last traded price of cum right. so you do not get RE for free .,

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38

IF you hold RE it must be either sold or applied for shares within the schedule .

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39

We can understand how the price of the RE is determined

Eg:

Let’s assume Company XYZ declares rights in the ratio of 1:2 (1 rights share for every 2 shares held)

The CMP of the share is ₹500

The Rights price is ₹400

Now the Ex-rights price need to be first determined

Ex-rights price = [(2 x 500) +(1 x 400)] / 3

= ~₹467

This means that after the rights issue, the share which are worth ₹500 will become ₹467, and this could result in loss of ₹33 per share.

@npsh99 So we are not getting anything for free, RE is priced to compensate for the loss

To avoid such loss, we should either subscribe for the rights share or Sell the RE (Rigts entitlement)

The rights entitlement price will be calculated as follows

= ₹33*2 = ₹66 per RE

1 Like
40

Thank you sir for the information. I got a clear picture. Appreciate it.