1 min read.Updated: 24 Sep 2021, 12:56 PM ISTLivemint
Bharti Airtel rights entitlement ratio entails one equity share for every 14 shares held by eligible shareholders as on the record date
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Telecom major Bharti Airtel's around ₹21,000 crore rights issue will open next month on October 5. The committee has approved September 28 as record date for the purpose of determining the eligible shareholders. The rights entitlement ratio entails one equity share for every 14 shares held by eligible shareholders as on the record date.
"Bharti Airtel has issued rights at discounted price and the growth story of the telecom company’s rights look positive, especially after the announcement of achieving ₹200 ARPU (Average Revenue Per User) from current ₹145 levels. Apart from this, company promoters are not sighing of pumping money that cements confidence. We give subscribe tag to this Bharti Airtel rights," said Ravi Singhal, Vice Chairman at GCL Securities.
Airtel's board had last month approved raising up to ₹21,000 crore by way of rights issue, amid plans to expand its network and prepare for the launch of 5G services, at a price of ₹535 per share, including premium of ₹230.
Yash Gupta, Equity Research Analyst, Angel One suggests small shareholders who hold less than 14 shares may sell their share at CMP as they will not get rights entitlement (RE) for the right issue and can buy again after the record date to avoid the loss from dilution of shareholding.
"For the long-term investors, first option can be is to subscribe to the right issue to avoid the impact of dilution of the shareholdings. Excess units not in multiples of 14 can be sold prior to ex-date and be covered post the Ex-date.
Second, they can sell the excess shares not in multiples of 14 before the ex-date and then trade away their RE. The proceeds from the RE and excess shares can be used to buy back the Bharti Shares. Both will compensate the shareholder for the equity dilution," Gupta suggested.
The mega fundraising is bound to give more firepower to Airtel as the company takes on rivals in the fiercely-competitive Indian telecom market.