Reliance Power - no cheer despite bonus

Reliance Power, which turned ex-bonus on Friday, closed down at Rs 235.85, reflecting the expanded capital of the company. According to analysts, the ex-bonus price was below the market expectation.

Opening at Rs 308.95, the scrip touched an intra-day low of Rs 231.71 on the BSE, before closing 42 per cent lower from the cum-bonus price of Rs 409.55 on Thursday.

The company had announced bonus issue of three shares for every five shares held, excluding the promoter group. This was done to compensate investors as the shares got listed at a discount to the offer price. On the first day, the shares closed at Rs 372 against the issue price of Rs 430(for retail investors).

Following the bonus issue, the cost of acquisition of Reliance Power stock was expected to come down by 40 per cent for retail shareholders to Rs 269 per share. In the same way, for institutional investors, the acquisition cost will be reduced by 37 per cent to Rs 281, as the issue price was fixed at Rs 450.

The Reliance Power stock managed to close above issue price of Rs 450 only once on February 25.

“We were expecting the shares to quote at around Rs 256; butthe price dipped to Rs 230 today as a lot of short positions were created,” said the head of research at a brokerage.

The company’s project will become operational only after four years and the stock is priced high, even after the bonus issue. So those investors who are not happy with the price seem to be exiting now, said Mr Sanjay Someshwar, a sub-broker with Ventura Securities.

“A lot of High Networth Individuals (HNI) seem to be exiting now. For the HNIs, who had bought the shares at the IPO price of Rs 275-280, even after the ex-date, the price hasn’t gone up. So, today they booked their losses and exited the stock,” added Mr Someshwar.

The shares recorded a total turnover of Rs 92.3 crore on the BSE and NSE together on Friday. The face value of scrip is Rs 10 per share. “The value of the share for the retail investor was set at Rs 270. And today, the stock is available at Rs 235, which means those who buy the stock now can get it cheaper than before. Those who missed the bus on the IPO or who did not get the bonus shares get it much cheaper, which makes the scrip a good buy at the moment,” said the director of research at a stock broking firm.