Rights Issue Calculator
A rights issue offers existing shareholders new shares at a discount, pro-rata to holdings — say 1 new share for every 5 held at ₹350 when the stock trades at ₹500. The stock mechanically re-prices ex-rights to the weighted average of old and new shares: the TERP (theoretical ex-rights price).
Enter the ratio, prices and your holding. The calculator returns the TERP, what each entitlement is worth, how many shares you can subscribe, the cheque you'd write, and a check that the whole operation is value-neutral at the TERP.
How it works
- TERP = (existing shares × cum-rights price + new shares × issue price) ÷ total shares — for an R-for-N issue: (N × cum + R × issue) ÷ (N + R).
- Value of one entitlement = TERP − issue price (what the right to buy one discounted share is worth).
- Your entitled shares = holding × R ÷ N (fractions typically lapse); cost to subscribe = entitled × issue price.
Frequently asked questions
Why does the share price fall on the ex-rights date?
It is mechanical, not a loss: the company will have more shares, some issued at a discount, so the average value per share falls to the TERP. Your wealth is preserved if you either subscribe or sell your entitlements — it is only doing nothing that destroys value.
What if I don't want to invest more money?
Sell your rights entitlements (REs) — they trade on the exchange for roughly TERP − issue price during the renunciation window. Letting REs lapse unexercised and unsold is the one strictly losing move: your entitlement's value expires to zero while the stock still re-prices ex-rights.
What exactly are the REs I see in my demat?
Rights Entitlements — temporary tradeable securities credited for your pro-rata rights, with their own ISIN and a short trading window (they stop trading a few days before the issue closes). Buying REs on-market and then applying, or selling your own REs, are both legitimate strategies.
Is a rights issue good or bad news?
It depends on why the money is being raised — deleveraging a stressed balance sheet reads very differently from funding growth capex. The structure itself is shareholder-friendly (existing holders get the discount, not outside investors), but the purpose in the letter of offer is what deserves the read.
Related tools
Rights issues have deadlines. Alerts beat reminders.
MarketPing flags rights announcements, record dates and issue-window filings for your stocks in real time on WhatsApp — with the AI summary of what the raise is actually for.
This tool is an educational estimate, not investment or tax advice. Rates and rules change — verify current figures and consult a professional before acting.