Rights Issue Shares in India - Upcoming & Ongoing Right Issues Details

Rights issue is one of the methods for a listed company to raise additional capital. A rights issue is an invitation to existing shareholders to buy additional new shares in the company. This type of issue gives existing shareholders securities called rights. With the rights, the shareholder can buy new shares at a discount to the market price on a stated future date. The company is giving shareholders a chance to increase their exposure to the stock at a discount price.

For instance, 1:2 rights issue means that existing investors can buy one extra share for every two shares already held by them. The price at which the new shares are issued through right issue is less than the current market price or at the discount.

A company requires such funds for corporate expansion or large takeover or whenever it needs funds. Right issues provide better leveraging opportunities.

A rights issue differs from a bonus issue in that investors pay money to get additional shares. One needs to subscribe shares under the right issue. In the case of bonus shares, a market participant receives additional shares instead of dividend in proportion to the shares already held.

right issue



Ongoing & Upcoming Right Issues in 2021


Ongoing Right Issue Issue Size Dates
L&T Finance Holdings 3000 Cr. 01 Feb - 15 Feb 2021
Urja Global  25 Cr. 25 Jan - 10 Feb 2021
Pricol Ltd 81 Cr.03 Dec - 17 Dec 2020


How a Rights Offering (Issue) Works?


In a rights offering, each shareholder receives the right to purchase a pro-rata allocation of additional shares at a specific price and within a specific period (usually 16 to 30 days). Shareholders, notably, are not obligated to exercise this right.

A rights offering is effectively an invitation to existing shareholders to purchase additional new shares in the company. More specifically, this type of issue gives existing shareholders securities called "rights," which, well, give the shareholders the right to purchase new shares at a discount to the market price on a stated future date. The company is giving shareholders a chance to increase their exposure to the stock at a discount price. (For more, watch the Stock Rights Issue video.)

But until the date at which the new shares can be purchased, shareholders may trade the rights on the market the same way that they would trade ordinary shares. The rights issued to a shareholder have value, thus compensating current shareholders for the future dilution of their existing shares' value. Dilution occurs because a rights offering spreads a company’s net profit over a wider number of shares. Thus, the company’s earnings per share, or EPS, decreases as the allocated earnings result in share dilution.

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