Reliance Power IPO? - Intended for LinkedIn members from India
Disclaimer: I am not expert in stock market and trying to gain knowledge from experts. So please don't feel annoyed if I sound like a lamer. And I am not directly or indirectly linked to Reliance. So no company promotion out here.
Questions:
1. Reliance Power IPO price band is declared at 405-450 INR per share and from media news, I heard that in grey market it is available at 700-800 INR/share. Do you feel it should touch 1,350 INR within 1 month of listing? If not, then whats your opinion on this?
2. I also read somewhere, that company won't have real profit booking in initial few years (may be till 2011-2012). But to keep the investors happy management might decide to move the existing projects to Reliance Power. As an investor, should I really feel happy about this decision and retain the stock for long term (2-3yrs) or should I treat it as a short term happiness and book short term profits?
3. Being a retail investor, I don't trust that I will gain plenty stocks under IPO allotment and as per existing market trends, I am 100% sure to see record-breaking over subscription for this stock. Would you recommend to pick-up the stocks from secondary market on first day of its listing, even at much much higher price (may be double of offered price band)?
Thanks in advance for your suggestions.
Answer Suggest Expert
Answers (2)
Harsh M
Manager - Visual Design at Brainvisa Technologies
Hi Dhruv
There is no doubt that Reliance Power is the most awaited and most talked IPO in recent years. The major reason behind is the boom in power and energy segment in Indian stock market and if reliance is jumping in this sector then its like a day-dream coming true for invertors.
Answers:
1. I feel it’ll list with the 1000+ INR tag very easily. Current sentiments are very good about RP IPO and if market scenario (no bad international cues, no cat fight between CPI and Congress, a good annual budget forecast) support the sentiment on listing day, it might touch 2000 INR level as well.
2. Your study is correct that RP will start counting profit after 2010 but don’t forget the Tag name “Reliance” – they really know how to keep invertors happy. I can name many scripts in Indian Stock market with no operating profit in current date but they are holing up their Stock value because of Future profits, good Brand image and strong management.
What to keep – a long Team view or a shot Term view – is a completely relative question. It is effected by how you want to rotate your money and what’s your investing/trading style is. But you wont be fooled in any case with this script.
3. the kind of listing we are expecting as per the first point I am sure that you might need to shell out the 3 to 4 times amount to get RP from secondary market. It’ll for sure going to have a gap-up opening so no scope for us to get it from the secondary market on listing date. I’ll suggest bidding for more units in IPO itself. Remember that RP is choosing the “Staggered option” for Bidding which means you only need to pay the 10% amount @ time of bidding and if the units are allocated to u, then please pay the remaining 90%.
But if u want to explore the secondary market for acquiring more units, don’t do on the listing day.
All the best for Bidding
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Brian D
Business Analyst/Project Manager at ICICI Prudential Life Insurance Ltd
1) i think it will go towards 1000/- but wont break that barrier in the first month. becuase thou there will be the initial euphoria abt a Rel stock, its still a high investment, long gestation stock. So it will soar in the first week but will settle down.
2) Power is a high investment and long gestation period project driven industry there fore yes there will be no profit or marginal profit (thru intelligent accounting) Would advise part short term and part long term strategy. Mix you choose.
3) Yes, you wont get much from the ipo but there will be even fewer chances from the secondary market.. Would go with Harsh's advice on staggered option
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