This rights issue calculator shows how many new shares you can apply for, how much cash you need and what the theoretical ex-rights price (TERP) is. It also compares your position if you apply, sell your rights entitlement or let it lapse, so you can see the cost of doing nothing.
Quick answer: Enter your shares, the ratio (X new shares for every Y held), the issue price and the market price before the ex-date. The tool returns your entitlement, the cash needed, the TERP and the value of each choice.
Rights issue and TERP calculator
Take the ratio, issue price and record date from the letter of offer on NSE or BSE. Prices change daily, so refresh the market price before you decide.
How the Rights Issue Calculator Works
The tool uses three formulas. Entitlement = Shares held x X / Y, rounded down. TERP = (Y x Market price + X x Issue price) / (X + Y). Value of one entitlement = TERP – Issue price. Consequently, a deeper discount to the market price gives a lower TERP and a more valuable entitlement.
Worked Example With Made-Up Numbers
| Input or result | Value |
|---|---|
| Shares held | 630 |
| Ratio | 277 new for every 630 held |
| Issue price | Rs 12.5 |
| Market price (made up) | Rs 20 |
| Entitlement | 277 shares |
| Cash to apply in full | Rs 3,462.50 |
| TERP | (630 x 20 + 277 x 12.5) / 907 = Rs 17.71 |
| Value of one entitlement | Rs 17.71 – Rs 12.5 = Rs 5.21 |
Apply, Sell or Let It Lapse
| Choice | Value of your position (made-up example) | What it means |
|---|---|---|
| Before the issue | Rs 12,600 | 630 shares at Rs 20 |
| Apply in full | Rs 12,600 | 907 shares at TERP, minus Rs 3,462.50 paid |
| Sell the entitlement | Rs 12,600 | 630 shares at TERP plus cash from selling rights |
| Let it lapse | Rs 11,157 | 630 shares at TERP, with no compensation |
The table shows why ignoring a rights issue costs money. The market price falls to the TERP after the ex-date, and only holders who apply or sell their entitlement recover the difference. Therefore, always decide before the renunciation deadline.
What Drives a Rights Issue
- Debt reduction: Companies use fresh equity to repay loans and cut interest.
- Growth funding: Some issues fund capacity, acquisitions or working capital.
- Fair treatment: Existing shareholders get the first right to buy the new shares.
- Speed: A rights issue is faster than a public offer.
However, a low issue price does not make an offer attractive. Judge the business first. Check debt, cash flow and profit using the PE ratio calculator and the shareholders’ equity guide.
Partly Paid Versus Fully Paid Offers
| Feature | Fully paid | Partly paid |
|---|---|---|
| Cash on application | Entire issue price | A part, such as 25 percent |
| Later calls | None | Yes, on notice |
| Risk of missing a call | None | Forfeiture risk |
| How this tool treats it | Use the full issue price | Use the full price for total cost; instalments only split the timing |
Steps to Apply for a Rights Issue
- Confirm the rights entitlement credit in your demat account after the record date.
- Read the letter of offer for the ratio, price and dates.
- Decide whether to apply, sell or let it lapse.
- Apply through ASBA in your bank’s net banking, or through your broker.
- Keep the acknowledgement and check the allotment in your demat account.
Common Mistakes
- Letting the entitlement lapse without selling it.
- Buying shares after the ex-date and expecting rights.
- Missing the earlier entitlement-trading deadline.
- Using a stale market price in the calculator.
- Applying only because the price looks low.
Frequently Asked Questions
How do I calculate my rights entitlement?
Multiply your shares by X and divide by Y, then round down. The tool does this for you.
What is the theoretical ex-rights price?
TERP is the expected share price after a rights issue. It equals the total value of old and new shares divided by the enlarged share count.
What happens if I ignore a rights issue?
The entitlement lapses, the price adjusts to the TERP and you lose the value that applying or selling would have kept.
Can I sell my rights entitlement?
Yes. Entitlements usually trade on the exchanges for a short window during the issue.
Do I pay tax on a rights issue?
No tax applies when you receive the entitlement. Selling it or the new shares can attract capital gains tax, so check current rules with an adviser.
Does the calculator handle partly paid shares?
It uses the full issue price for total cost. Partly paid structures only change when you pay, not how much.
Does the tool store my data?
No. It runs in your browser and sends nothing to our server.
Final Thoughts
Run the numbers before each rights issue, compare all three choices and read the letter of offer. Explore the stock split calculator and the stock market glossary on Investor Weekly News. This page is educational and is not investment advice.