The Right Issue lets current shareholders buy additional shares at a discounted price, offering them a chance to invest more. Companies most commonly issue a right offering to raise additional capital.
Table of contents
Upcoming Rights Issue 2024
| Company | Record Date | Issue Open | Issue Close | Issue Price |
|---|---|---|---|---|
| Purple Finance | Sept 26, 2024 | Oct 4, 2024 | Oct 11, 2024 | ₹40 |
| Sahana System | Sept 25, 2024 | Oct 11, 2024 | Oct 25, 2024 | ₹890 |
| Rapid Investments | Sept 18, 2024 | Sept 26, 2024 | Oct 10, 2024 | ₹8.40 |
| Narmada Agrobase | Sept 16, 2024 | NA | NA | ₹15 |
| Sadhana Nitrochem | Sept 13, 2024 | NA | NA | ₹6.06 |
| Tilak Ventures | Sept 13, 2024 | Oct 3, 2024 | Oct 11, 2024 | ₹2.2 |
| Advik Capital | Sept 12, 2024 | Sept 24, 2024 | Oct 4, 2024 | ₹2.5 |
| Synergy Green Industries | Sept 11, 2024 | Sept 23, 2024 | Oct 4, 2024 | ₹325 |
| Emerald Leisures | Sept 10, 2024 | Sept 17, 2024 | Sept 24, 2024 | ₹12.5 |
| Ganesha Ecoverse | Sept 9, 2024 | NA | NA | ₹35 |
| Oriental Trimex | Sept 5, 2024 | Sept 19, 2024 | Sept 27, 2024 | ₹11 |
| Srivari Spices and Foods | Sept 4, 2024 | Sept 24, 2024 | Oct 3, 2024 | ₹175 |
| Patel Integrated Logistics | Sept 6, 2024 | Sept 19, 2024 | Oct 1, 2024 | ₹18 |
| Sru Steels | Aug 31, 2024 | Sept 9, 2024 | Sept 24, 2024 | ₹10 |
| Ducon Infratechnologies | Aug 30, 2024 | Sept 12, 2024 | Sept 19, 2024 | ₹7 |
| Vardhman Polytex | Aug 28, 2024 | Sept 12, 2024 | Sept 27, 2024 | ₹6 |
| Akshar Spintex | Aug 23, 2024 | Sept 9, 2024 | Sept 30, 2024 | ₹1 |
What is the Right Issue?
The Right Issue is when a company invites its current shareholders to buy more shares at a discount. Shareholders offered new shares at a discount, enabling the company to raise funds without involving new outside investors.
It can finance growth initiatives, such as business acquisitions or new production facilities, supporting company expansion and development. Although additional shares may dilute existing ones, the company’s expansion could enhance long-term capital gains for shareholders.
How does the right issue work?
It allows a company to raise capital by offering existing shareholders discounted shares, proportional to their holdings.
Here’s how it works:
- Announcement of Right Issue: The company announces the rights issue, detailing the number of new shares being offered. The price at which they can be purchased, and the ratio of new shares to existing shares. (e.g., 1:2 means one new share for every two existing shares)
- Issuance of Rights: Additionally, A Right Issue lets a company raise capital by offering existing shareholders rights to buy discounted shares in proportion to holdings.
- Exercise of Rights: A Right Issue allows a company to raise capital by offering existing shareholders discounted shares. Additionally, shareholders can choose to exercise their rights by purchasing the new shares or selling their rights on the stock exchange if transferable.
- Lapse of Rights: If the shareholders do not exercise their rights within the specified period, the rights will lapse, and they will lose the opportunity to purchase additional shares.
- Allotment of Shares: After the right issue period ends, the company allows the new shares to shareholders who have exercised their rights.
- Impact on Share Price: The share price may adjust after the rights issue, usually reflecting the new supply of shares and the discounted price at which they were offered.
- Dilution: While a rights issue helps the company raise funds, it can dilute the value of existing shares because there are more shares in circulation. However, existing shareholders can maintain their ownership percentage by exercising their rights.
Right Issue’s FAQ’s
A right issue of shares benefits existing shareholders offering them the advantage of applying for shares at a discounted price and retaining their voting rights. A company can raise a reasonable amount of capital through the rights issue of shares.
Even if one does not hold any shares, they are still eligible for the rights issue. They can apply for the rights shares either through the RTA’s portal or via net banking ASBA if their bank permits it.
Is the right issue profitable?
Dilution occurs because a rights offering spreads a company’s net profit over a larger number of shares. In turn, the company’s earnings per share, or EPS, decreases.
That essentially means that you get the right to purchase shares issued by your company in the ratio of 1 share for 3 shares held by you.
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