I understand, rights issue means If I own a company, I am given an offer to buy more shares at a different price (usually lower than market price, right?).
My questions
1.) If a company offers me to buy share at 100rs discount to market price. And I don’t buy the shares. Does that mean, I am basically losing 100rs? As I can buy the share in rights issue and sell at market price? If I decide not to buy, will I be given any compensation? If not, this means, I can never “buy a stock and forget about it”??? Since, I need to check for rights issue continously??
2.) How is the price adjusted after a rights issue in historical data? Let’s take example of IDEA. On 29 march 2019, it declared Rights 87:38 @ Premium Of Rs 2.50 Per Share. How did it impact the stock price? Can someone please explain step by step calculation???
(1) You should never do things like buy and forget about a scrip unless “may be” you are a very big investor . there will be Rights offer , Buyback offers , Delisting offers , Open offers where shareholders action is required or else it lapse. and you lose on gains if any . if one is in share market one must be active enough to en-cash small arbitrage opportunities even though your purchase is investment not trading.
(2) Grasim rights issue which is of partly paid share ( rights entitlement will trade last today 23.01) market price of fully paid share 2070 …RE traded 310 amount payable on application 453 . assuming market price stay around 2070 only as the time of PP listing i am expecting it to list at some premium say 780-800 … amount of balance 1359 to be paid in upto 3 calls by march 2026.