Everything you need to know about UPL Limited Rights Issue

Corporate actions Rights issue
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Update: UPL Limited will make the first call for the balance payment of partly paid shares. January 30, 2025, is the record date to determine the shareholders eligible for the final call notice. You can check the announcement from the company here.

As a result, the partly-paid shares of UPL Limited (UPLPP) were suspended from trading on exchanges from January 29, 2024, and you are no longer able to see these holdings on Kite.

You can check the announcement from the company here.

Event Schedule
Payment ₹ 90.00 per share
Call Payment Period 17th February 2025 - 3rd March 2025
Allotment & Listing Within 2-3 weeks from the last date of payment
How do I make the call payment?

You can make the call payment via the following modes:

  • Netbanking ASBA.
  • Physical ASBA: Submitting a physical application form to SCSB’s designated branch.

You can find the list of SCSB (Self Certified Syndicate Banks) here.

What happens if I don’t make the call payment?

If you fail to make the payment, the company may forfeit the partly paid shares you hold and may also levy interest on the amount owed.

FAQs

The company has published Frequently Asked Questions (FAQs) regarding the first call in the investor section of its website. You can access them here.

Further, the pending amount of ₹180 per share will be payable upon the company’s announcement and will be collected in the second or final call, as determined by the company. You can track updates in the company announcement section on the exchange here.

UPL Limited (UPL) has announced a rights issue of 9,38,25,955 equity shares aggregating up to Rs. 3,377.73 crores. The rights issue opens for subscription on December 05, 2024, and closes on December 17, 2024.

Anyone who holds shares of UPL Limited as of November 26, 2024 (record date) will be eligible for receiving Rights Entitlements (REs). 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 the company or you can sell them in the market.

You can check the announcement from the company here.

You will be eligible to receive Rights Entitlements (REs) if you’ve bought the shares on or before November 25, 2024. The ex-date is November 26, 2024.

Rights issue details

Issue Period December 05, 2024 - December 17, 2024
RE Trading Period December 05, 2024 - December 11, 2024
RE Symbol UPL-RE
Issue Price Rs. 360 per share (Rs. 90 on application)
Ratio 1:8
EX-date November 26, 2024
Record Date November 26, 2024
Tentative Date of Allotment for rights shares December 24, 2024
Tentative Date of Credit of rights shares December 30, 2024
Tentative Date of Listing for rights shares January 01, 2025

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

Amount payable per equity share Face Value Premium Total
On Application 0.50 89.50 90.00
One or more additional calls as may be decided by the company 1.50 268.50 270.00
Total 2.00 358.00 360.00

If you continue holding partly-paid shares of UPL Limited when the company calls for the balance payment, you will be liable for paying the balance amount. If you have sold the partly-paid shares, the buyer will be liable for the payment.

How to apply for UPL Limited Rights Issue?

Once you either receive the REs from the company or purchase them from the market, you can apply for the rights shares using the below methods;

You can check the application process here.

You will need to enter your Demat account’s Beneficiary Owner ID which is a 16-digit number while applying for the rights issue.

The option to apply for rights shares through the RTAs portal is not available for this rights issue.

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 FAQs on Rights Issue and Rights Entitlements here.

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How to pay for rest of the call money of 270/ per share of UPL as it’s not shown in asba right issue list of companies.
When to submit the amount.?
Do they send mail for balance payment call request.?what is the last date of balance payment?
Zerodha answer is bogus with beating about the boosh kindly of reply so pls reply hear.

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Hi @Shiv_Chatterjee ,

The company will announce a call money notice for the balance payment. A payment schedule will be provided, and you’ll need to make the payment during the specified window.

Yes, the company’s Registrar and Transfer Agent (RTA) will send official communication via email to all eligible shareholders.

As a broker, we do not have access to these details until they are officially published by the company on the exchange websites. You can also track updates directly on the exchange website here by clicking on the ‘Announcements’ section.

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Excellent to the point answer

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Sir,how to find good arbitrage in right issues,please explain briefly on arbitrage ratio on right issues sir,how to find good profitable/ good arbitrage in rights issues,Thank You sir…

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Hi @3nadh , apologies for the delayed response.

Let’s take UPL as an example.

There’s a potential for arbitrage if one can buy the rights to these new shares at a price lower than the expected stock price after the rights issue.

When a company announces a rights issue, it offers existing shareholders new shares at a discount. This leads to share dilution, which causes the stock price to drop. Because when new shares are issued at a discount, the total number of shares increases while the company’s value remains the same, pushing the price down on the ex-date.

For this, you must first understand the Theoretical Ex-rights Price (TERP). Explained here:

In the UPL example:

  • Closing price on pre-ex date: 568
  • Rights issue price: 360
  • Ratio: 1:8 (1 new share for every 8 existing shares)

Now, applying the formula:

TERP = ( Rights share * Offer price + Existing shares * Market price) / Total number of shares

Theoretical Ex-rights Price (TERP) = (1 x 360) + (8 x 568) / (1+8)
(360+4544) / 9
544.89

TERP : 544.89

Now, the acquisition cost:

Assuming you bought at 191 (the open price of the RE) and the issue price is 360, the total cost would be 551.

Acquisition cost: 551

Btw, the scrip’s historical price is on the exchange website here.

Lastly, compare with TERP (544.89): 551 − 544.89 = 6.11 (Loss).

This means there was no arbitrage opportunity because the RE price was too high. The adjusted price (544.89) was lower than the cost to acquire rights shares (551).

This information is given solely for educational purposes and is in no way advice.

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very grateful for you sir,
Before last date for re prices trading low,that time will re shares buy means Will get profit or not sir,and before ex date share price will consider or not sir or only ex date price only consider ? Thank you sir…

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Excellent explanation Sir,
Sir I have dought in UPL RE trading period December 5, 2024 to December 11, 2024 and price gradually down form December 5, 2024 to December 11 from 196rs to 179rs,at December 11 UPL RE shares at low price 179rs buy means will get profit or not sir ,that time how will you calculate arbitrage sir, and in calculation Closing price on pre-ex date price only consider or before date of Closing price on ex date also consider or not sir,how will you know before ex date ofs is it good or bad., preferential issue and ,qip this also applicable for arbitrage? arbitrage is there means how will calculate preferential issue,qip arbitrage…, Thank you sir…

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Dear Sir,

Please pick and reply the my doughts (questions)Sir…

Regards,
Trinadh

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@3nadh Checkin, please allow me sometime.

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Happy New Year Sir :confetti_ball::confetti_ball:,Thank you Sir…

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This is an interesting and relevant thread for me . I have got 22 shares allotted thru UPL Rights issue at Issue price of INR 360 , with partly paid up of INR 90 per share (as per issue process). And, these Partly paid 22 shares is listed in demat acocunt with a current price of 248. My understanding is - UPL RE share is quoting lower than RE price of INR 360 (i.e INR 248+ INR 90 (which is already paid along with application) = INR 338) . Is that correct ? If I decide to sell my 22 shares of UPL PP , how much proceeds I will get ? Is it INR 248 as shown currently ? Or the amount of INR 90 I have already paid ? Kindly clarify . Thanks in advance.

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Can I have a response to my query above please ?

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@3nadh Apologies for the delay,

If yu would have bought it at 179. Your cost would be 179+360 = 539.

Again, comparing with the TERP: 544.89. (544.89 - 539 = 5.89)

You’d make a small profit of 5.89 per share if the stock price stays at 544.89.

You can use the closing price on the pre-ex date. It shows the stock’s value before the adjustments. Upon the record date, it will have already been adjusted.

This yu will need to do your own analysis.

  1. You can check the stock price and compare it with the right issue price. If a significant difference is found, it might have some value.

  2. The REs price during the trading period.

  3. The above explained Theoretical Ex-Rights Price (TERP).

With all the above, it depends on the overall interest in the issue and sentiment in the market. This is dynamic, one can not always be sure.

In a preferential issue, shares are issued at a fixed price. QIP is issued at a discount. In both cases, the profit is calculated by the market price less the issue price.

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Hi @jeyaramg ,

The 248 market price you see for the PP shares already includes the 90.

This is incorrect. You need to consider the current price of the PP shares i.e., 248.

Also, the remaining call money (270) is still pending as part of the total issue price of 360. You’ll need to make the payment when the company call for the balance payment.

If yu sell these shares, yu will receive 248 * 22 = 5456.

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OK. Thank you for the clarification. It looks like it makes sense for me to sell 22 now

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Thank you very much Sir for unknown information sharing(teaching)to all…

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Sir,you get profit or not,your how much amount to participate the upl rights issue,and how much amount get the profit for calculations purpose,please share the calculations for your buying and selling of right issue with the prices,i am newly learning to stock market basics…, Thank you sir…

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Sir, regarding to some one earlier question is 248+90+270=608,is it correct or not sir,TERP price is 544.89,so much of difference is there,how to know when the announcement of right issue will get profit or not,Please share the when the newly announcements happend that right issues use to explain me sir…,Thank you Sir for your suggestions and sharing good knowledge…

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The calculation is incorrect because it double counts the 90 already paid and includes the current market price of 248. The market price of 248 already includes the 90 you paid during the application. Therefore, adding 90 again to 248 is incorrect.

If yu continue hold the shares, you’ll need to pay the remaining 270 per share when UPL announces the balance payment call.

Explained here:

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