What experts say about Reliance Power listing?

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Reliance Power listing is a big awaiting event for every investors on the street, who have got allotment of it shares as well as for market as it was the biggest issue in Indian Capital Market history. It is going to list on Monday, February 11, 2008.

During the issue time, experts were expecting the premium for Reliance Power nearly Rs 400-450. Everyone was very optimistic about this listing. But as the market’s turmoil has been started post issue, the premium also start declining. It reduced to Rs 120-150 as per experts quote. So we will check what experts are expecting on listing?

Manisha Bhatt of Prabhudas Lilladher says, “Reliance Power is expected to list with Rs 120-130 premium. One can book partial profits during the day. The stock can go below issue price of Rs 450 if market remains subdued.”

According to R S Iyer of K R Choksey Securities, “The stock is likely to list at around Rs 450-500 after looking at negative sentiment and low volumes in the market. It will not slip below issue price. People should not sell the stock due to panic, they should wait for better price. The stock will see the price of Rs 650 in near term but not on listing day. So once this sentiment would get improved in near term, investors can sell the stock at that price, till that time wait.”

“It is presumed that share will list at around Rs 600 per share, on 11th February. In that situation, it is likely that majority of HNI Category investors would come to sell in the market and this category is holding about 2.28 crore shares. Since, majority investors of this category had gone for margin funding, purely from trading angle, this liquidation is likely to happen”, Investment Advisor, S P Tulsian said.

He also said, “Retail Category is holding about 6.84 crore shares and since, returns to them are quite high, as compared to HNI Category, good amount of profit booking is expected by these investors as well. While talking about QIB Category, they are always smart to take the side, where wind is blowing. Since, investment of only Rs 45 per share, having made by this category of investors, interest cost to them is low at around Rs 27 per share. Hence, they will be too eager to book profit on the listing day at a price levels of Rs.600 per share.”

“Hence, it is likely that selling of close to 5 crore share, may get witnessed on the listing day, from all categories of investors, put together. Due to dull sentiments now prevailing in the secondary market, matching buying may not emerge, which could keep share price soft on the listing day. Profit booking is advised in the counter upto Rs.575 level, as prices are likely to fall below this level, in the next 15 to 20 days and may get settled at around Rs.500 levels. Buying is not advised above Rs.550, for first couple of days, as lot of volatility is likely”, he added.

The issue price has been fixed at Rs 450. The stock will be part of NSE F&O, the lot size is of 450 shares and options strike priced between Rs 10-1350.

Reliance Power IPO was oversubscribed approximately 70 times. Portion reserved for qualified institutional buyers was oversubscribed 82.5 times, 10% of the net issue reserved for non institutional investors was oversubscribed 159.6 times and 30% of the net issue reserved for retail investors was oversubscribed 13.6 times.

With approximately 42 lakh shareholders Reliance Power will be the largest shareholder base company among the companies listed on the Stock Exchanges.

Reliance Power is the flagship company of the Reliance ADA Group to develop, construct and operate power generation projects. The company is currently developing 12 power projects with a combined planned installed capacity of 28,000 MW, one of the largest portfolios of power generation assets under developments.

Source : moneycontrol.com

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