RIL faces max fall in retail shareholder

Weak performance by RIL at the stock exchanges has not gone down well with its retail shareholders.

Weak performance by Reliance Industries at the stock exchanges has not gone down well with its retail shareholders. Once the preferred choice of small retail investors,the countrys largest private sector firm witnessed the highest fall in its retail shareholder numbers over the last six years in the financial year ended March 2012.

According to the data available in the companys annual report,Reliance Industries saw a reduction in its shareholder numbers by 1,13,490 in the category of investors owning between 1-500 shares. This is the biggest fall in shareholder numbers in a year over the last six years going by the annual report. While the number of total shareholders declined by 1,16,011 from 35.2 lakh in March 2011 to 34.06 lakh in March 2012,the shareholder category holding between 501-1,000 shares witnessed a drop in numbers by 1,477.

Even the large shareholders seem to be in the exit mode as the company witnessed a decline in the number of shareholders holding more than 20,000 shares of the company,down from 1,900 in March 2011 to 1,788 in March 2012. The companys share price fell by 28.6 per cent in the financial year ended March 2012 as against a 10.5 per cent fall in the Sensex during the period.

Experts say that purely from a stock perspective,as of now,the upside looks capped but the downside is open,especially as gas output from its KG-D6 block in the Krishna Godavari basin continues to drop and margins under pressure. The overall sentiment in the market is weak and RIL has underperformed over the last one year, said a senior official at Enam Securities.

Between 2006 and 2010 the company witnessed a sharp rise in the number of shareholders 8211; first in 2007-08 on account of IPCL merger and then in 2009-10 as Reliance Petroleum was merged into Reliance Industries 8211; with the result that the companys shareholder base jumped from 20.04 lakh in March 2006 to 35.6 lakh in March 2010. But it has fallen by 156,039 over the last two years amidst a weak performance by the company at the exchanges.

To give boost to the falling share prices,the company announced a buy-back offer of shares worth Rs 10,440 crore at a price of up to Rs 870 per share in January 2012. The buy-back will be done between February 1,2012 and January 19,2013.