Yes even i have applied from SBI and also appears in HDFC bank.
Hi, the REs are trading at INR 15 spread versus the equity shares. Is it correct that this is essentially an arbitrage opportunity? If one holds an equity share, one can sell that and buy the RE, and gain INR 10 per share? Is there any risk in this setup? Many thanks.
One risk being the price of the share is going to fall further down.
So a potentially more lucrative alternative might be
to simply sell the share now and hold the cash
until after the RE concludes and the price of the share has fallen further
as far as it would due to the dilution due to the REs actually exercised.
Let’s think of it this way, how many of the folks who bought the RE at Rs.140 today are in it to make a quick buck?
(i.e. will happily sell off at Rs.141 the share they get in the near future)
In that sense, the current RE price can act as a decent leading indicator of the actual share price in the near future.
IMO, NOT an arbitrage at all.
Because one would be selling today’s share
and by purchasing an RE, expecting to receive a share in future (whose price we do not have control over).
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Thank you @cvs, this is very helpful and makes sense. One quick clarification: If I buy an RE on the screen today, I will receive an equity share with 100% certainty - as long as I apply in the window and pay additional INR 5. Is that correct?
Sorry for the basic questions. I have not dealt with REs before. Thanks.
You should get notification from company RTA upon allotment. The rights shares will be credited to your demat account by 23rd February (this date is tentative and can change).
One question on taxation of shares received after buying rights entitlements:
If we buy the rights entitlements (say at INR 140) and pay INR 5 for conversion to equity, and hold the equity shares for >1 year, how will the capital gains calculated for this? Can we use the INR 140 paid in our acquisition price computation?
Thank you.
Hi There,
I have applied for RE which is allotted to me on Heritage Foods, But i also purchased some more RE shares and want to apply again through ASBA for the new RE shares,
Will this be accepted…? Or only once time application is required for both.?
Please clarify.
ThankS, Sunil
You will have to cancel the earlier application and make a new once for all the quantity you hold.
Thankyou for the quick turnaround,
Last one, would i be receiving any official mail on the new RE’s that is allotted or it just the assumptions.?
Upon allotment of rights shares you should get notification from the company’s RTA. Btw, you get guaranteed allotment to the extent of REs you hold.
Thank you @ShubhS9 for your time and info,
I really liked the topic and information provided in this page, cheers
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I have a doubt about how many shares a renounce-e (i.e one who has bought the rights entitlement in open market can apply through ASBA).
- I did not own any underlying share before the rights record date.
- I bought X shares (say 10) of RE through open market during the designated period.
- Now, when I pay the Rights Premium (i.e INR 5), I would be able to convert them to actual shares (through ASBA).
Question :
- Can I apply more than the RE’s shares I have (in this example 10). i.e Say now can I pay 10000 shares * INR 5 = 50000 INR and apply for them? Or such application would be rejected - since I am ONLY entitled to apply for 10 shares for conversion?
You can apply for any number of right shares, you will be guaranteed allotment for number of REs you hold. For the remaining quantity, the allotment will depend on the issue subscription.
If you don’t get the allotment for remaining quantity, the amount will be refunded to your bank account.
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@ShubhS9 , i applied through netbanking 3 days back , till now no confimation email from nse / cdsl / bank side for submission of ASBA application , or will only get RTA notification only after feb 13 ? ( asking bcz RE will be extingushed tomorrow )
Dear sir,
I have applied rights issue of Heritage food on 1st of February and waiting for it to reflect on my portfolio. I believe that is enough, please advise if I need to do something further.
Thanks
You don’t have to do anything else. The rights shares are listing on exchanges on 27th February, should be credited before this.
I Hold 7000 shares @330 i missed to apply for the RE shares and current market price is showing 150 what will happens to my existing shares
You will continue to hold your existing shares but their value has declined to the current market price. The REs have been extinguished.
I have also not taken any action during Rights Issue process.
What does it mean by “Extinguished”? Does that mean I have suffered loss? This is quite bothersome.