RELIANCE Industry 1:1 Bonus on 21 Jul'2017, subject to final approval of existing shareholdrrs.
One to three month time gap is observed between bonus announcement date and Ex-Bonus date on which bonus shares are deposited in investor's account. On Listing of Bonus shares, market prices get adjusted, as Equity base of company increases.
It is also observed that, investor freternity perceives announcement of Bonus share as an confidence of management in future growth in earnings and gives some premium.
Therefore, expecting, Reliance share prices to achieve Price Target of 2,025 INR before Ex Bonus.
Rationale behind Expectation :-
(1) Technicals :-
(1. A)
Prices has moved consistantly in northward direction, after closing above 1,150 INR.
(1.B)
One to three month time gap is observed between bonus announcement date and Ex-Bonus date on which bonus shares are deposited in investor's account. On Listing of Bonus shares, market prices get adjusted, as Equity base of company increases.
It is also observed that, investor freternity perceives announcement of Bonus share as an confidence of management in future growth in earnings and gives some premium.
Therefore, expecting, Reliance share prices to achieve Price Target of 2,025 INR before Ex Bonus.
Rationale behind Expectation :-
(1) Technicals :-
(1. A)
Prices has moved consistantly in northward direction, after closing above 1,150 INR.
(1.B)
Furthermore, above Price-Volume Chart, long Volume bar, at first closing above 1,150, suggest it was break -out after long accumulation.
(2) Fundamentals:-
2. (A) Oil Business:-
Company has joined hands with global giant BRITISH PETROLEUM for fresh investment of thirty to forty thousand crore INR. New policy of GOI, is favourable for enterpreneurs.
2. (B) Retail Business :-
Company's retail chain business has turned profitable. Implementation of GST is perceived positive for retail chains.
2.(C) Telecom Business:-
2. (C).(i) CAPEX Cycle
CAPEX cycle in Telecom business has completed. now it has started to generate revenue.
2. (C).(ii) Building huge custome base:-
JIO brand achieved first milestone of creating huge customer base out of scrtach in record time - thanks to innovative marketing.
2. (C).(iii) Stretegy to accelerate growth:-
On 21st July 2017, company unveiled its stretegy of provide free 4G Volte handset absolutly free of cost for instant migration of 2G/3G device users into 4G volte. As per stretegy, 1,500 Rs Security Deposit(SD) will be payable by user, which will be refunded after 3 year on surrendering used handset. Company is backwardly integrated to manuacture these handsets in INDIA. Free of Cost and Made in India tag is expected to surge Demand without single rupee marketing cost. Faster achievement of targets will achieve Breakeven with accelerated revenue flow at lowest tariff. Needless to say, lower tariff will act as silent killer for competitors. On longer run market domination will be monitised. Some more Intangible benefits envisaged are Input Tax credit, depreciation& insurance claims & guranted customer loyalty etc.
(3)Risk Factors :-
(3.A) Technicals:-
Above charts shows, Reliance has outperformed Benchmark Index NIFTY , ever since it closed above 1150.
Above Chart shows, Nifty has one sided move in 2017 (see the chart) and due for correction. Any correction in Nifty is likely to halt upmove and correction in Reliance share prices can not be ruled out.
(3.B) Fundamentals:-
Now, it all depends on execution of new stretegy and holding the gains.
In Telecom sector, competitors are regrouping and expected to come out with new initiatives for survival. But looking to fact that they are having huge "DEBT to service", it will be easy for Reliance to counter their moves.
(4) Concluson:-
Reliance and Mukeshbhai Ambani has proved their core competancy in executing larger than Life projects in OIL & Retail Business with patience. In Telecom also they have achieved first milestone in record time and moving ahead with cyclonic speed to make new history. So, one can safely conclude that 1:1 Bonus is well planned and Company will able to serve increased Equity Base without any trouble.👏🏻Therefore, Shares of Company may be accumulated on every dip, for investment.
--
Disclaimer :-
Writer is independent trader in stock markets and may have positions in RELIANCE EQUITY and Derivative instruments including NIFTY & Reliance. Blog is to share trader's perception & views. Charts are drawn on google data using google sheet and all efforts are done to maintain calculation accuracy. However, before taking action consultation with qualified financial consultant is advised.
