Reliance Ind plans 1 for 1 bonus issue
MUMBAI (Reuters) - Energy major Reliance Industries Ltd plans a 1 for 1 bonus share issue for every share held, a move seen soothing investors following the stock's recent underperformance to the market.
The company's stock has fallen nearly 4 percent since it raised $660 million from treasury stock sale announced on Sept 17, while the broader market has risen 0.8 percent.
The board of India's most valuable listed firm also recommended a dividend of 13 rupees per share.
Reliance Industries, headed by billionaire Mukesh Ambani, and Reliance Natural Resources, led by his estranged younger brother Anil, are battling over a gas-supply deal agreed upon when the Reliance empire was split between the two in 2005. The case will be heard in the Supreme Court on Oct. 20.
"It is a masterstroke by the big brother," said R.K. Gupta, managing director at Taurus Asset Management in New Delhi.
"Seems like he wants to please shareholders to get their support as the gas battle goes on. Also, the market has not given a very good response to the stock after treasury stock sale. So this will definitely improve sentiment."
Gupta expects the market to react positively on Thursday to the bonus share and dividend announcement.
Ahead of the news, shares in the company, valued at about $70 billion, ended 1.6 percent lower at 2,099 rupees. The stock is up 71 percent so far this year, just behind a 74 percent rise in the main index.
Reliance also released restated results for the 2008/09 year ended March 31 to reflect the absorption of its Reliance Petroleum unit with effect from April 1, 2008.
Net profit for the year was 152.96 billion rupees ($3.3 billion) and net turnover stood at 1,512.24 billion rupees. The numbers are not comparable with that of the previous year because of the absorption of Reliance Petroleum, the company said.
Chief Financial Officer Alok Agarwal told reporters the company was on track with the production ramp-up for its KG D6 oil and gas fields off India's east coast, and has the financial flexibility to make further investments.
Analysts have said last month's treasury stock sale was intended to create a comfortable cash position for the firm. Agarwal said the company's current treasury stock was valued at 400 billion rupees.
The company has produced 2.7 million tonnes of crude oil and 5 billion cubic metres of gas from the KG D6 field since April 1, and started 16 of 18 wells needed to achieve maximum capacity, he said.
(Editing by John Mair)
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