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Reliance Industries shares to turn ex-dividend this week. Here's what you need to know

Ex-dividend is the date before the record date a company has set for determining eligible shareholders for the dividend benefit. (Bloomberg)Premium
Ex-dividend is the date before the record date a company has set for determining eligible shareholders for the dividend benefit. (Bloomberg)

  • RIL has announced an 80% dividend to its shareholders for FY22. The Mukesh Ambani-led company plans to pay these dividends within a week if declared and approved in the annual general meeting (AGM).

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India's largest company in terms of market share, Reliance Industries (RIL) will be turning ex-dividend on stock exchanges this week. Ex-dividend is the date before the record date a company has set for determining eligible shareholders for the dividend benefit. RIL has announced an 80% dividend to its shareholders for FY22. The Mukesh Ambani-led company plans to pay these dividends within a week if declared and approved in the annual general meeting (AGM). Notably, record date and payment data are two different dates for dividends. RIL shares witnessed a bull run last week.

Earlier this month, during its June 2022 quarterly result announcements, RIL had fixed August 19 as the record date for determining the members eligible to receive a dividend for the financial year FY22. Thereby, the shares will turn ex-dividend on August 18. 

"The dividend, if declared at the AGM, will be paid within a week from the conclusion of the AGM," it said in its regulatory filing.

The company will be holding its 45th annual general meeting on August 29.

On May 6, RIL announced a dividend of 8 per equity share at a face value of 10 each for FY22.

Last week, on Friday, RIL shares closed at 2,632.65 apiece up by 42.45 or 1.64% on BSE. RIL is a heavyweight stock on benchmarks. It is the most valued stock with a market valuation of more than 18 lakh crore.

RIL shares have skyrocketed by nearly 4% last week on Dalal Street.

As per the shareholding pattern, there are 33,06,684 public shareholders of RIL on BSE with the number of fully paid-up equity shares held to the tune of 3,24,11,15,693 equity shares.

Dividends:

Dividends are incentives for holding a portion of shares in a company. Shareholders are entitled to a portion of the profits a company makes as a form of 'dividend' if the company decides to distribute them. Generally, when a company earns profit they share a certain portion of the surplus with the shareholders. majority of the time, big companies announce dividends.

When an investor purchases a listed company's shares on exchanges they become a shareholder or owner of the number of shares held in the entity. Simply put, the shareholder also holds a percentage in the company, however, the percentage depends upon the number of shares you hold.

While ex-dividend is the business day before the record date of declaring eligible shareholders for the payout. That means -- it is the day when a company finalises the shareholders who will receive the dividend. Generally, an investor should hold the stocks of a company before the ex-dividend to be eligible for the benefit. Thereby, investors who buy the stock on the ex-dividend date or later will not be eligible for dividends announced for a particular fiscal by the company.

Whereas record date is the date when the company determines who are its shareholders and is eligible for the dividend.

To be eligible for the dividend, an investor needs to buy a company's shares at least two days before the ex-dividend. That's because trading in shares either ‘buy’ or ‘sold’ reflects in the investors' Demat account after two business days.

On BSE, RIL is under group 'A' with a settlement type of 'T+2'.

For instance, if shares are bought on Tuesday, this becomes the 'trading date' which is the 'T' in the settlement option. These shares bought will reflect in the Demat account after two business days, i.e. Friday, hence 'T+2'.

To receive a dividend you must have a Demat account and be a shareholder of the company. Ensure that your bank account is updated and linked with the Demat account.

Should you invest in RIL shares?

The company has announced its financial performance for the quarter ending June 30, 2022. In Q1FY23, RIL posted a consolidated net profit of 17,955 crore rising by 46.3% yoy and 10.8% qoq. Consolidated revenue from operations stood at 223,113 crore up by 54.5% yoy and 5.3% qoq. Subsidiaries Reliance Retail and Reliance Jio earnings were also strong in the quarter. While the company delivered its best-ever quarterly performance with all-time-high Revenue and EBITDA.

Last month, Nomura Research Analyst Aditya Bansal in his note said, “With weaker 1Q and sharp correction in refining margin, we lower FY23/24F consolidated EBITDA by 8%/3%, largely on lower O2C profitability. Our earnings estimate cuts are sharper largely due to a higher tax rate. We expect ~22% consolidated EBITDA CAGR over FY22-25F. We continue to value RIL on an SoTP basis and roll forward our valuation to Jun-24F (from Mar24F)."

Bansal added, "With the roll-forward offsetting the cut in refining valuations, we revise our TP to 2,885 (from 2,800). We maintain our Buy rating on RIL. Progress in its New Energy foray, 5G spectrum auction and pricing, and the upcoming Annual General Meeting (AGM) could be the near-term catalysts for the stock."

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

 

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