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Below Are Quote on Bharti Airtel right issue By Mr. Yash Gupta, Equity Research Analyst, Angel One Ltd   

Bharti Airtel has fixed the record date of 28th September 2021 for the determination of eligibility to receive the right entitlement in the issue to its shareholders. Company will use the proceeds of ₹21,000 crores to expand its network and for the launch of 5G services.

The issue will open on 5th October 2021 and will close on 21st October 2021.The record date is September 28, 2021 for the purpose of determining the shareholders who shall be eligible to receive the rights entitlement. Company has fixed the ratio of 1:14 i.e investors will get right to entitlement of 1 share on every 14 share they hold on to the record date.

Any shareholder having less than 14 shares or not in multiple of 14 shares then fractional entitlement of such eligible equity shareholder shall be ignored for computation of the right entitlement. Board has fixed the issue price of ₹535 which is a discount of 26.5% to its current market price of ₹728. The right issue amount will be payable in three installments, first on application i.e 133.75 and other two calls will be decided by the board in the future within the next 36 months.

We suggest 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, they may act on this right issue and do so initially via multiple options. First option 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.

Those who are unable to apply to this Rights Issue may trade away their REs when the window for trading opens. Finally, arbitrageurs may also look at the value of the RE and use Black Scholes Option pricing model to determine the listing price of the partly paid shares to formulate more complex strategies involving purchase of additional RE from the market.

 The good news for the retail shareholder is that the promoter and promoter group will collectively subscribe to the full extent of their total right and in addition promoter group will subscribe for the unsubscribe shares in the right issue. This will give some confidence to retail shareholders.

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