Whats all the buzz with RELIANCE PP

I don’t understand paid-up capital

how is RELIANCE different from RELIANCEPP how do they differ as a company & (its the same company right?) stock

I have invested around 10k in RELIANCE and obviously doing great, on the other hand, I had invested about 5k in RELIANCE PP and one day it is +500 the other day is -300 it is not in sync with its counterpart RELIANCE!!!

Please help me understand:

  1. RELIANCE PP
  2. Paid-Up Capital
  3. How is it related to Recent RIL Fundraising & Rights Issue
  4. What’s the difference between RELIANCE & RELIANCE PP
  5. Which stock is better to invest and why?
  6. Which one is better than the other?
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Hi @Akhil,

Let me try and help answer some of these questions. First, let us understand the rights issue and what Reliance has planned.

Reliance had a share price of 1450/- when the Rights issue happened. They gave the Rights shares at a discounted price of 1257. The payment for the rights issue will be taken over 3 installments. The first installment at the closure of the issue of 314.25 has been paid by people who have bought the rights. The second payment is due May 2021 and the third is due Nov/Dec 2021.

So 314.25 (June 2020) + 314.25 (May 2021) + 628.5 (Nov/Dec 2021) = Rs. 1257/- the rights issue price.

Now the Reliance PP of 314.25 has listed and then had to match the price of the underlying Reliance share.
So today Reliance is at Rs. 1900/- so Reliance PP = 1900 - ( 314.25 + 628.5, yet to be paid amounts) = 950 ish.
Hence the return for Reliance PP seems higher right now and the percentage move as well.

  1. Reliance PP = Reliance Partially Paid, meaning these shares have not been paid for in full yet.
  2. Paid Up capital = To the money paid vs. money due to the rights issue share. In this case, paid-up is 314.25 and the rest 950 is to be paid.
  3. This is the rights issue Reliance did to raise funds.
  4. As described above Reliance is fully paid-up share vs. Reliance-PP is partially paid.
  5. They are not different stock and prices will move together in the same direction to match each other. The choice to be made is do you want to invest in reliance stock or not. Difference Reliance PP is less priced for now till the next installment comes due. Then you the owner of the PP share will have to pay the installment to retain the share. Or you buy Reliance fully paid share now and have no future installments to pay. Either way, they will merge to the same price Dec 2021.
  6. Reliance PP is better in the sense it gives you the option of installments to pay up the full price of the share.
    Second, there is an issue that you will not get the full dividend. you will get the paid capital percentage of the dividend. Paid capital is in the following percentages 25% + 25% + 50% (314.25+314.25+628.5).

Hope this helps!
Br,
Andy

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Wow such a great explanation! Thanks a lot @adhyayanneg I tried surfing the entire internet for this clarification.

One more question. So now that I have invested 5k in Reliance PP should I pay them anything in 2021? Via Zerodha kite!?

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@Akhil thanks for the kind words. Now that you have Reliance PP, to retain them till they convert all Reliance PP to Reliance Fully Paid shares you will have to pay the remaining installments of Rs. 314.25/- May 2021 and Rs. 628.5/- Nov 2021.

These payments will not go to Zerodha nor through Kite. The payment will have to be made via the registrar’s (KFinTech) website to Reliance. You will recieve the notification from them closer to the payment date.
Hope this helps!
Br,
Andy

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Oh so that means I can buy and sell the stock like regular tickers for until/before may 2021.

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yes most probably you can trade unless there is unnecessary baseless restriction placed by Zerodha

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Great, ah now I finally understand Reliance PP swoosh :sweat_smile::innocent:. Many thanks to @adhyayanneg & @Aditya_Gupta

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Yes, you can, it will continue to move and will tend to match Reliance in movement. That being said it will have some difference between the two because of difference in supply-demand.

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Yaa got it.

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Nobody posted detailed notes the the RIL annual report. I am posting here.

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Current RIL PP CMP is 1208.05 and one still owes two installment …314.25 and 628.5 ( I assume one installment is already paid ) so if I buy now …total value as of now is 2231.75
But Actual RIL CMP is 2146.15
Why there is a difference of almost 100 Rs. is it because we are getting at installment without any interest?

@ShubhS9 @siva

@adhyayanneg great explanation!!
Could you please entertain the below question aswell,

I got the Reliance PP @1395, If I keep these shares, will I still be liable to pay the remaining installment due in May (314.25) and November 2021 (628.5) or will I still be required to pay the remaining 950.

Appreciate your response!!

BR,
Manu

If you’re holding the Reliance PP shares when the call for payment is made, you’ll be liable to pay the installment amount.

Yes, basically the situation is such that you can look at the Reliance PP as a Future share. which basically means Reliance PP is a reliance share but can be bought on margin without actual leverage or interest payments etc. hence the higher inherent value right now. I would think the gap will reduce closer to the call for payments. May 2021 and Dec 2021 it will tend to 0.

Br,
Andy

yep, you will be liable to pay the remaining amounts when called for. or you could sell your rights shares before the call and then be clear of liability to pay the installments.

Br,
andy

A) I bought reliance PP shares @1268 per share, how much would I have to pay as the 1st installment in May 2021 and Nov 2021? PLEASE HELP!

B) Can I sell off my Reliance PP shares aftet May2021 once the first installment is paid?

The rights shares were issued at Rs. 1257 and partly-paid shares are paid upto Rs. 314.25. Depending on company, if they decide to make only one and final call, you’ll have to pay Rs. 942.75, this will be less if company decides to make more than one call.

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Yes, you’ll be able to sell the shares.

Great Explanation. Could you clarify below?
I hold Reliance PP shares at price 1027.
Say, I decided to hold the shares and I pay the second installment in May 2021 (i.e. 314.25 per share). As the PP shares can still be traded post the second installment, What would be the PP share price post May? Will it be the same as the closing price of last traded price before trading is stopped.

I did not apply for the Right issue in June, But I have purchased Reliance PP shares recently and it has been suspended today. Am I eligible to pay the 2nd & 3rd installment?

Yes, you’re eligible to make the payment. You can check more details on this here: First Call on Reliance Partly-paid Shares