Reliance Industries Limited (RIL) on Wednesday announced issue of bonus shares after a 12 year-hiatus, a move that analysts expect would flare up the markets on the eve of Diwali.

The company founded by Dhirubhai Ambani, credited for drawing retail investors to stock markets in the 1970s, recommended an issue of one bonus share for every share held by shareholders and would help unlock value.

The board has also approved a dividend of Rs 13 per fully paid-up equity share of Rs 10 of the company to the shareholders, Reliance Industries CFO Alok Agarwal said.

Analysts said that the surprise announcement of a bonus issue by RIL, will definitely act as trigger for the market on Thursday.

"This comes as a big surprise to the shareholders of Reliance Industries and would propel investor sentiment. The scrip, which has been under-performing for the past few days, is likely to open strong. It is a move by RIL to win back investor confidence," SMC Global Vice President Rajesh Jain said.

The last time Reliance Industries announced a bonus issue was in October 1997.

"Both the bonus shares and dividend will accrue to the shareholders of RPL," RIL CFO Agarwal said.

Geojit BNP Paribas Financial Services Research Head Alex Mathew said, "The company had last announced a bonus issue way back in 1997, so this is good move in the interest of investors.

"The proposal for bonus and dividend continue RIL's tradition of awarding shareholders on a sustained basis. If we look at our track record since we listed in 1978, our shareholders have got 25 per cent compounded return over these 31 years since it became a public company," Agarwal said.

"The announcement can act as a trigger point for the stock (RIL) which was mired in controversy. RIL management is convinced that it can serve the investor interest and so it is thinking about increasing the equity share capital. It can hold up the momentum and the counter can outperform the Sensex in the coming days," Unicon Financial CEO G Nagpal said.

Source:PTI