Everything You Need to Know About the Bharti Airtel Rights Issue

Bharti Airtel the telecom major has announced a rights issue of 39.3 crore equity shares aggregating up to Rs. 21,000 crores. The company will issue RIghts Entitlements (REs) to anyone who holds its shares as of September 28, 2021 (record date).

You will be eligible to receive Rights Entitlements (REs) if you have bought shares on or before September 24, 2021. The ex-date is September 27, 2021. These REs will be temporarily traded on the stock exchanges and will then be extinguished. You can either use the REs to apply for the rights shares of Bharti Airtel or you can sell them in the market.

You can check the announcement from the company here.

Issue Details

Ex-date September 27, 2021
Record Date September 28, 2021
Ratio 1:14
Issue Price â‚ą 535 per share
Issue Period October 5, 2021 to October 21, 2021
RE Trading Period October 5, 2021 to October 14, 2021
Tentative date of credit October 29, 2021
Tentative date of listing November 2, 2021

This is a partly-paid issue, meaning at the time of application you only have to make part payment.

Amount payable per equity share Face Value Premium Total
On Application 1.25 132.5 133.75
Two more additional calls as may be decided by the company 3.75 397.5 401.25
Total 5 530 535

If you continue holding Bharti Airtel partly-paid shares when the company makes a call for the balance payment, you will be liable to pay the balance sum. Alternatively, if you sell the partly-paid shares, the buyer will be liable to pay the sum.

How to apply for the Bharti Airtel Rights Issue?

Once you either receive the REs from the company or purchase them from the market, you will need to apply for the rights shares using Netbanking ASBA. You can check the process in this post.

You can also apply for rights shares through the website of the Registrar and Transfer agent.

You will need to enter your demat account’s Beneficiary Owner ID which is a 16-digit number while applying either on the RTA’s website or through your bank.

What will happen to my purchased holding of RE shares if I do not apply for the rights issue?

Your REs will lapse and you will lose the premium paid to acquire them. The RE will be in the form of temporary demat securities which will lapse if not renounced/exercised once the trading window is closed.

I don’t have the shares but bought REs, am I still eligible to apply for the rights issue?

In case you have bought REs but don’t have shares, you’re still eligible for the rights issue. You may apply for the rights shares either through the RTA’s portal or via net banking ASBA if your bank allows it. If you don’t take any action, and let the REs remain in your Zerodha account, they will lapse after the issue.

You can read more FAQ’s on Rights Issue and Rights Entitlements here.

Image credits: Steve Jurvetson, Flickr.

Bharti Airtel announced record-date for its Rights issue as 28th Sep [Tues]. Does that mean the last date to purchase the shares to be eligible for rights shares is 24th Sep [Fri].

Please confirm @ShubhS9

1 Like

Yes, the ex-date will be September 27th. To be eligible for RE’s rights entitlements, you will have to buy shares before ex-date.

Also, even if you don’t buy shares before ex-date, you can still apply for rights shares by purchasing RE’s from the secondary market.

How will this rights issue affect its stock price?
My gut feeling says that price will come down as many people will get it lower cost. Please tell me if I am wrong.

Thanks Shubham. One more follow-up question.

The price usually corrects after the record-date… in that respect… when is the FIRST date to SELL your holdings and still GET the rights-shares entitlement… I think it is the ex-date…

Pls confirm @ShubhS9

Yes, the price of stock is likely to go down as rights issue will increase the number outstanding shares in the market.

This is the adjustment formula: (Rights share * Offer price + Existing shares * Market price) / Total number of shares

The price adjustment will happen on ex-date. You can sell the shares on ex-date, you will still be eligible to receive the RE’s.

In that case, if the price goes down based on the adjustment factor, the lot size will increase correspondingly… correct ?

Also if I am not wrong, the Capital Gain taxes on Rights issues are similar to Capital Gain taxes on Bonus shares (and not similar to shares-splits)… correct ?

Pls clarify… @ShubhS9

The exchange has explained the adjustments methodology for F&O positions here.

The taxation in case of sale of RE’s has been explained here.

If I am eligible for 100 right shares can i apply for more than that?

Yes, you can apply for more than 100 shares. Though the allotment for 100 shares will be guaranteed. For remaining shares if you don’t receive the allotment, amount paid will be refunded.

2 Likes

Hi,

I have been allotted rights for Airtel and it hit my demat today.

How can I sell the same?

1 Like

You can sell the REs like any other stock. The trading window opens on October 5th.

hi there,

the shares only show up in console → holdings → ISIN number.
what’s the last date to apply or give up the rights ? SBI ASBA; it’s not showing now, please clarify if it show, when it will and other than ASBA, RTA Karvy fintech is the only option ?

@ShubhS9

The REs will show on Kite once the trading window opens on 5th October, this is also when the issue opens for subscription. The option for applying through Netbanking ASBA should be available then, you will also be able to apply through RTAs website.

thanks @ShubhS9, last question - for selling in open market (( trading period )), are there any obligation or procedure to do with RTA or anywhere to tell them that you sold received shares…

No, you don’t have to do any such formalities.

Hi @ShubhS9.

I don’t see this Rights issue in my ASBA bank account. Can you please help with alternatives?

Thanks,
Gaurav

Neither https://rights.kfintech.com/airtel/ has a way to apply.

Can anyone help me in simple terms of what’s to be done for the below -

  1. I see 6 RE shares in my holdings. I don’t wish to purchase additional 6. I’m happy with my 84. What should I do ?

  2. I see 6 RE shares in my holdings. I wish to buy them. What’s the process to pay for those 6 ? I usually pay up by UPI on Kite and purchase shares

Pardon my ignorance and silly questions please. Thanks