Anil Ambani took the first step towards rebuilding investor confidence among millions of Reliance Power investors.
To consider bonus issue within a week after poor listing
MUMBAI: Anil Ambani took the first step towards rebuilding investor confidence among millions of Reliance Power investors.
For a company which listed just a week ago, on February 11, the Reliance Power board surprised everyone on Sunday when it announced that it will meet on February 24 to consider a bonus issue.
The promoters, who hold an 89.5% stake, have excluded themselves from the proposed bonus entitlement.
The top brass of the Reliance Anil Dhirubhai Ambani Group, which typically works overtime on weekends, made the announcement late on Sunday and marketmen believe that it will be received well in the market place.
“It will better the sentiments of the Reliance stock. The objective is to mitigate the losses suffered by Reliance Power investors,” said Vinod Kumar Sharma, head of research, Anagram Securities.
On listing, the retail applicants who were allotted shares at Rs 430 saw their share valuation erode by 10.53%, as the shares ended last Friday at Rs 384.70. For institutional investors, which subscribed the shares at Rs 450, the loss has been even sharper at 15%.
Sejal Doshi of Finquest Securities admits the announcement has come as a “big surprise”.
“It is a confidence-building measure,” Sejal said.
On Sunday, when the board chaired by Anil Ambani meets, the company would unwittingly create a record for declaring a bonus within a fortnight from the listing of shares.
The announcement will try to assuage the bitterness (in hindsight) among investors that the shares of a company which owns a portfolio of power projects, which will take about three years to come up, had priced the shares at a huge premium.
As Sharma reasoned: “The objective is to recoup the losses made by investors. They (RPEL promoters) are making amends for the high pricing by diluting the promoters stake.”
For Anil Ambani, who has lined up several IPOs for group companies, it is clear that he will leave no stone unturned in his quest to make his investors happy.
RPEL investors would have to wait to know the bonus ratio. When DNA Money asked market pundits, many shied away from putting a number. Sharma, however, took a shot at guessing the ratio.
“It could be one share for every five owned,” he says. That would be reasonable and will placate investors.
Marketmen believe that although the bonus ratio will be known only on Sunday, the markets will have a lot to cheer on Monday. For the moment, the company said the move is in keeping with the Reliance ADA Group’s fundamental and over-riding philosophy of creating value for genuine long- term investors.
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