Penny stock Suzlon Energy announces right issue in ratio of 5:21 at a discount of 45 per cent to its market price; should one participate in it?
Issue price is fixed at Rs 5 per equity shares, which is at a discount of 45 per cent to the last traded price on NSE.
From being investors' darling to becoming a penny stock, the journey of Suzlon Energy has been not less than a dramatic Bollywood movie as the stock plummeted from its high of four digits to a single digit!
Suzlon Energy has been synonymous with renewable energy and has been a consistent contributor to India’s green energy journey. What started decades ago as their championing of strategies and technologies to fight climate change have now become the mainstay of energy transition roadmaps all over the world.
On Sunday, company has released the outcome of the meeting of the securities issue committee of the Board of Directors of the company, wherein, the board has decided for issuance of the equity shares of the company by way of a right issues to the eligible equity shareholders of the Company.
What is a right issue?
In a right issue, a company raises funds by issuing more shares, but only to existing shareholders.
Issue price is fixed at Rs 5 per equity shares, which is at a discount of 45 per cent to the last traded price on NSE. Out of Rs 5, the first tranche of Rs 2.5 per equity share is payable on application and Rs 2.5 is to be paid on subsequent call(s).
Right entitlement ratio: 5:21 (Five Rights Equity Shares for every Twenty-One fully paid-up Equity Shares held by the eligible equity shareholders of the Company, as on the record date as may be notified subsequently). If the shareholding of any of the eligible equity shareholder is 5 (Five) or more, such shareholders will be entitled to at least 1 (One) Equity Share.
Interestingly, rights entitlements are offered to shareholders as a ratio to the number of securities held on this record date. A shareholder may refuse to subscribe to the rights issue and just let the 'right' lapse. Alternatively, the shareholder can renounce/trade the entitlement in favour of another person for a price.
The stock has gained 43.31 per cent in the last one year and in the last three-years it has been delivered jaw-dropping returns of 193.55 per cent, as a result, the stock has turned into a multi-bagger.
India is at a critical juncture on its path toward a carbon-neutral economy. India also holds a central position on the global energy transition roadmap due to its massive renewable energy potential, inherent manufacturing capabilities, and ever-expanding domestic consumer base. Indian Renewable Energy across the domain must multiply every year to honour the Prime Minister's pledge at COP26 to meet global climate goals.
India's installed renewable energy capacity stood at 161 GW in June 2022, amounting to 39.8 per cent of the overall installed power capacity in the country. Within renewable energy, the contribution of wind energy currently stands at over 25 per cent.