Reliance Capital to Delist from Indian Stock Exchanges

Reliance Capital incorporated in 1986, is engaged in finance and investment activity and has officially announced that the resolution plan put forward by the Hinduja group’s company, IndusInd International Holdings Ltd (IIHL), for the Reliance Anil Dhirubhai Ambani Group (ADAG) has been given the green signal by the National Company Law Tribunal (NCLT) on February 27, 2024.

As a consequence of this, the entire existing share capital of Reliance Capital will be canceled and extinguished, providing nil consideration for equity shareholders. In simpler terms, this means that shareholders will not receive any compensation as a result of this resolution.

Changes in Shareholding Stake:

As of now, public shareholders own a substantial 98.48% stake in Reliance Capital, while 0.88% is held by Reliance Capital promoters. Following the delisting process, IndusInd International Holdings Ltd will take complete ownership of Reliance Capital. Consequently, the value of the 98.48% stake held by public investors will be reduced to nil or zero. Under the terms of the resolution plan, IIHL is set to pay Rs 9,650 crore for Reliance Capital upfront in cash.

It is crucial to note that this development has far-reaching implications for the stakeholders involved. While IIHL gains full control of Reliance Capital, the equity shareholders, who currently constitute a significant portion of the company’s ownership, will not receive any monetary compensation for their shares.

“The liquidation value of the equity shares for RCL is NIL, and consequently, equity shareholders will not be entitled to receive any payment. No offer will be made to any shareholder of RCL. The entire existing share capital of RCL is proposed to be cancelled and extinguished for NIL consideration, as per the NCLT Approval Order. This ensures that IIHL and/or the Implementing Entity, along with its nominees, are the sole shareholders of the Corporate Debtor,” said Reliance Capital.

Share Performance:

The company’s stock ceased trading on February 26, 2024, closing at Rs 11.79 per share on the BSE, reflecting a 4.46% decrease from the previous day’s closing levels. The current market capitalization of the company is Rs 297.94 crore on the BSE.

Additionally, the company’s stock has yielded a negative return of approximately 14% in the past month and a 43% return in the past year.

Financials Performance:

During the December quarter, the company reported revenues of Rs 6098 crore, compared to the revenue of Rs 5218 crore in the same quarter last year. The company’s operating profit stood at Rs 218 crore, resulting in an operating profit margin of 4%, compared to an operating profit of Rs 51 crore. Moreover, the company reported a net profit of Rs 81 crore, compared to a net profit of Rs 16 crore.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.