Indian Hotels Ltd. (INDHOTEL) will issue RIghts Entitlements (REs) to anyone who holds its shares as of November 13, 2021 (record date). You will be eligible to receive Rights Entitlements (REs) if you have bought the shares on or before November 10, 2021. The ex-date is November 11, 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 Indian Hotels or you can sell them in the market. You can check the announcement from the company here.
Issue Details
Ex-date
November 11, 2021
Record Date
November 13, 2021
Ratio
1:9
Issue Price
₹ 150 per share
RE Trading Symbol
IHCL-RE
Issue Period
November 24, 2021 to December 8, 2021
RE Trading Period
November 24, 2021 to December 2, 2021
Tentative date of credit
December 17, 2021
Tentative date of listing
December 22, 2021
How to apply for the Indian Hotels 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 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.
Usually ex-date is 1 day before the record date in case of rights issue. Why in this case it’s 2 days.
In company announcement only record date is mentioned. How ex-date is calculated for rights issue?
There are two options, the REs you have received can be used for applying for rights shares of Indian Hotels, you can check out the application process above. Another option, if you do not wish to apply for rights shares, you can sell them in the market, just like you sell stocks.
You can learn more on Rights Issue and Rights Entitlements here.
It is not mandatory to sell. As explained above, you have two options, either to apply for rights shares or sell them in the market if you do not wish to apply. If you do not apply for rights shares, the REs will expire worthless.
Though there is no loss for you as the REs are alloted at no extra cost. But, issue of rights shares increases the outstanding shares in the market and this in turn dilutes value of the shares you hold. Please check out this post: What effect does rights issue have on stock price? - #3 by ShubhS9
So instead of not applying and letting the REs lapse, you can sell them in the market and pocket the premium.
How should we calculate the profit earned through these Rights Issue. e.g. lets say I have been given 10 REs which are currently trading at Rs 60.
If I sell them, I immediately earn 60X10 = Rs 600 as profit since I did not pay anything to buy them.
If I retain them, they will be offered to me at, say Rs 150 when the issue closes. Assuming the stock is trading at Rs 200 then, I stand to make (200-150)X10 = Rs 500 on the opening day (i.e. after Rights get converted to stocks) which is all profit.
Apart from the 10 REs which were issued to me by the company, I buy 10 more at Rs 60. So my total cost of 20 REs becomes (0 + 60X10) = Rs 600. Assuming the stock is trading at Rs 200 when the issue closes, I stand to make (200-150)X20 = Rs 1000 on the opening day (i.e. after Rights get converted to stocks). Since in this case, my cost price was now Rs 600, I stand to gain Rs 400.
i have applied through the linkintime portal as doing it through the hdfc net banking route was very inconvenient. The amount of 4500 (for 30 re) was immediately debited and didn’t go on hold. Is that ok ?
Secondly, suppose if i buy more re’s from market in the next few days, How do i Exactly convert them ?
(Its my first time applying for a Rights Issue, please answer my stupid questions)
If you’re applying from RTAs portal, the funds will be debited from the account.
You will have to apply again. You can do so from the RTAs portal and this will be considered as incremental application and will be tagged to the earlier one.
@ShubhS9 Let’s say if I have bought more RE’s from the market at Rs x/RE and I have not yet applied to confirm those RE’s from the linktime portal so now if I apply, do I need to apply for the total RE’s I have now after buying more?
What will happen to the money invested to buy more REs in addition to RE’s already have because on the subscription side I guess we need to pay Rs 150/share before December 2 otherwise all the RE’s will be invalid.
You need to apply for total number of REs you hold. It doesn’t matter whether you’ve bought those from secondary market or were allotted as a shareholder. You can even apply for more shares than the number of REs you hold, although the allotment will be guaranteed only to the extent of REs held. For remaining shares the allotment will be done randomly, if you don’t get the shares, amount will be refunded.
If you fail to apply for rights shares, you will lose the entire premium paid, if any to purchase the REs as these are temporary securities and will lapse once issue closes.
@ShubhS9 What will happen to the money which I have invested to buy the additional REs from the secondary market because when I am applying for the right shares I am going to apply according to Rs 150/share?
The money you pay to buy REs goes to the shareholder who has sold them. And yes, you will have to pay Rs. 150 per share when you make the application, the amount paid towards purchasing REs will not be considered towards this.
The RE trading window closed yesterday. This will not open again.
If you’re holding REs, you should apply for the rights shares, the window for application is open until 8th December. If you fail to apply, you will lose the entire premium paid if the REs have been bought from the secondary market.
As the trading window has closed. The REs will no more reflect in your holdings on Kite.
The issue is open until 8th December, and you can make an application for rights shares until then. You can make the payment either through the portal provided by the RTA or through Netbanking ASBA is supported by your bank. You can check out the process above.
They will remain in your demat account until issue closes, after that the REs will lapse. As explained above, these are not reflecting in your Kite holdings as they are no more trading.
You can apply for any number of rights shares. However, the allotment will be guaranteed only to the extent of REs held. For remaining, the allotment will depend on the subscription recieved and will be done on random basis, if you don’t get allotment for extra shares, the amount will be refunded.
