There are two possible scenarios for retail investors to exit pre and post the Reliance Power bonus. One is to sell before the bonus itself or wait for the bonus to hit the markets.
If they sell before the bonus - let’s say if price touches about Rs 450 and the cost of acquisition per share is about Rs 430, they were making a profit of Rs 20 on each share and most of them are allotted about 15 shares. So net income profit is about about Rs 300.
But if you take a scenario of post bonus issue, one of the unknown is out of the question - which is the bonus issue. Now, one has to have a fair assumption of what the fair price is going to be. Let's assume that the fair price is about Rs 350, pre-bonus issue. Thereby post-bonus issue, the price will come to around Rs 330. Thereby the profit - on a per share basis the profit is going to be Rs 61.
So if assuming somebody has got allotment of 15 shares, the number of shares will go to 24. So 24 multiplied by 61 would give a profit of about Rs 1460. If you assume that the fair price is Rs 300, then the market price is going to be around Rs 283, which is about 14% profit per share - that will come to around Rs 330 or Rs 336.
So people have to fairly assume the fair price and then see whether they want to sell it right now or whether they want to sell it after the post-bonus issue. But the cut-off price for somebody to make a profit on this particular stock, is Rs 285 on a current market price basis.Should you exit pre-bonus or post-bonus?
Pre-bonus exit
-If price touches Rs 450,retail investor profit at Rs 20/sh
-For 15 shares, total profit made at Rs 300
Ex-bonus Exit
a) For Rs 350 pre-bonus price, retail investor profit at Rs 61/sh
-For 24 shares, total profit made at Rs 1,464
b) For Rs 300 pre-bonus price, retail investor profit at Rs 14/sh
-For 24 shares, total profit made at Rs 336
c) For Rs 285 pre-bonus fair price should be the cut off to avoid lossesSource:Moneycontrol.com
Reliance power to give 3 bonus shares for every 5 shares held .Rpower post bonus issue , the cost of acquisition of Rpower shares would come down to Rs 269 for retail investorsReliance power in the next 12 months could offer more than 50% gains (as the case in all ADAG scrips)Record date is Yet to be announced.
L&THDILRIILCenturion BankPowergridSBIICICIRCOM & Rpl
Issue Period: Feb 19 to Feb 22Price Range: Rs.90 to Rs.105Minimum Mkt Lot: 60 sharesIssue Size: Rs.1400 cr to Rs.1640 cr
Recommendation: Strong SubscribeExpected Gains on Listing Day (in percentage terms): 15% to 35%Expected Range of Listing Price: Rs.120 to Rs.145Chances of winning Allotment: Strong (in Retail category)Sector: Financial Services (power sector related)RecommendationThe GOI's Eleventh Plan anticipates substantially increasing India's power capacity by the year 2012 & it is estimated that the implementation of the GOI's power sector plans will require overall funds of Rs.10,316 billion for investment in transmission, distribution & generation. REC Limited will be a prime beneficiary from the increased growth of, and investment into, the Indian power sector.The business of REC Limited will stand to benefit from the increased growth of, and investment into, the Indian power sector. The issue of REC Limited is priced attractively in terms of valuations vis-a-vis its closest peer from the same space PFC. We recommend for a 'strong subscribe' to this IPO for Long-term investors. Short-term investors can expect modest-to-smart listing gains, even amidst current market volatility.
Issue Period: Feb 18 to Feb 21Price Range: Rs.80 to Rs.85Minimum Mkt Lot: 80 sharesIssue Size: Rs.64 cr to 68 crGrade: Above AverageExpected Gains on Listing Day (in percentage terms):15% to 25%Expected Range of Listing Price: Rs.95 to Rs.110Chances of winning Allotment: Strong (in Retail category)Sector: Engineering (Multi product goods)Recommendation
Much of the market in which the Company operates is unorganized & fragmented with many small & medium-sized companies. The Company faces substantial competition on the basis of product range, product quality, after sales service including factors, based on reputation, regional needs & customer convenience from other manufacturers in domestic or divisions of large MNCs. On the other hand, V.Guard has around 15% of the market share in Voltage stabilizers in India. Pumps & Cables are the Company's second largest product categories. In present competitive environment, the Company develops effective, improved & reliable home appliances & have strong customer focus in the form of providing after sales services will be increasingly differentiated from the others in the field. The Company has a good brand value of 'V-Guard'. Hence we recommend High risk investors to subscribe to this issue of multi-product company for medium to long-term investment
Issue Period: Feb 11 to Feb 15Price Range: Rs.400 to Rs.450Minimum Mkt Lot: 15 sharesRecommendation: AvoidGrade: AverageChances of winning Allotment: Strong (in Retail category)Sector: Information TechnologyRecommendationsThe IT services market is highly competitive. The increasing attractiveness of the Global Delivery Model is forcing the overseas-based competitors to expand their base in India. The company lacks diversification in terms client operations most of which are located in USA. The valuations of this mid-cap IT company's issue is expensively priced vis-a-vis its other listed peer group companies like Aztec Software, Geometric software, Hexaware, KPIT Cummins, etc. Hence we recommend investors to Avoid this IPO.
Taking into consideration that Reliance Power Limited has laid out an abmitious plan of 28,200 MW power generation capacity, none of which are operational as of now, and also factoring in the long gestation period needed in the execution of such large power projects, there may be some volatility in the stock movement of the company after listing in short to medium-term. But, all-in-all, the company should be able to meet the planned expectations over a long-term period. Hence we recommend investors to subscribe to the issue with long-term perspective for more enhanced & superior returns.NTPC and tata power are available at cheaper valuations than Reliance Power but the Ambanis have this knack of pulling off impossible.AA is planning to enter into nuclear power and his team has already started the ground work for this foray.Within 3 months of listing you will hear big news from Reliance power.We see bright future for reliance power in long term.ADAG group has vision and we must give some time for our investment to grow.Wealth cant be created overnight especially in stocks like Reliance power which has long gestation period
Period: Feb 04 to Feb 08Price Range: Rs.85 to Rs.95Minimum Mkt Lot: 70 sharesIssue Size: Rs.38 croreRecommendation: AvoidGrade: AverageChances of winning Allotment: Strong (in Retail category)Sector: ConstructionRecommendation:SVEC Constructions values are comparably or expensively vis-a-vis its peer group competitors like MSK Projects, PBA Infrastructure, Tantia Construction. We recommend investors to Avoid subscribing to this IPO. SVEC Construction IPO may give modest gains of 10-20% if secondary market conditions improve during the time of listing of this IPO. But, it is advisable to Avoid to this IPO.
Issue Period: Feb 01 to Feb 06Price Range: Rs.540 to Rs.630Minimum Mkt Lot: 10 sharesIssue Size: Rs.5540 cr to Rs.6460 crRecommendation: Subscribe (High Risk Investors)Grade: Good (For Long-term)Expected Range of Listing Price: 595-685 Chances of winning Allotment: Strong (in Retail category)Sector: Real-estateRecommendation: They have many projects in hand but most of them are on foundation stage, so most of them will take time to complete it .The issue is quite expensive priced vis-a-vis with market leaders like DLF and Unitech. But looking at the strong Parentage support of internationally acclaimed company Emaar & domestic expertise of MGF; we recommend High-Risk investors to subscribe to this IPO with Long-term horizon.
Issue Period: Jan 31 to Feb 06Issue Price: Rs.45/- (Fixed Price)Minimum Mkt Lot: 150 sharesIssue Size: Rs.23 croreRecommendation: AvoidGrade: AverageChances of winning Allotment: Strong (in Retail category)Sector: Plastic PackagingRecommendationManjushree Extrusions Limited operated in a globally competitive environment & it faces significant competition from countries such as China, which also have cheap labour & significant production capacities. The Company may also face competition from established companies & future entrants into this industry. The growing competition may force Company to reduce the revenues & margins and/or decrease the market share. Some of the companies who operate in the same line of business as the Company are Pearl Polymers Ltd., Wimplast Ltd., Essel Propack Ltd., Mold-Tek Technologies Ltd., Fenoplast Ltd., etc. Hence we recommend subscribe investors to Avoid subscribing to this IPO
Period: Jan 31 to Feb 05Price Range: Rs.185 to Rs.220Minimum Mkt Lot: 30 sharesIssue Size: Rs.945 cr to Rs.1123 crRecommendation : Subscribe (Medium to High Risk Investors)Expected Range of Listing Price: Rs.250 to Rs.300Chances of winning Allotment: Strong (in Retail category)Sector: InfrastructureRecommendationIndian construction sector is becoming increasingly attractive . The order books of construction companies in Road infrastructure space are likely to remain buoyant, especially in the case of larger construction companies that are expected to gain a greater share of BOT road projects planned over the next 5 years. Hence we recommend Medium to High Risk investors to subscribe to this IPO for Listing Gains/ Long-term horizon or both.
Wockhardt Hospitals LimitedIssue Period: Jan 31 to Feb 05Price Range: Rs.225 to Rs.260Minimum Mkt Lot: 20 sharesIssue Size: Rs.639 croreRecommendation: AvoidAllotment: Strong (in Retail category)Sector: Healthcare SectorRecommendation:The key ongoing industry wide challenges are providing quality patient care in a competitive environment & managing costs. Other areas of concern may be continuous technological & pharmaceutical improvements that increase the cost for providing, or reduce the demand for, healthcare; changes in the distribution process or other factors that increase the cost of supplies. Also, the valuations of the company seems quite expensive. Hence we recommend investors to Avoid subscribing to this IPO and wait for the opportunity to buy at a lower level after listing.
Tulsi Extrusions Limited - AvoidIssue Period: Feb 01 to Feb 05Price Range: Rs.80 to Rs.85Minimum Mkt Lot: 75 sharesRecommendation: AvoidAllotment: Strong (in Retail category)Sector:Engineering (Pipes)Recommendation: The Company competes with other pipe manufacturers in organized as well as unorganized sector on the basis of availability of product, product range, product traits, quality, price, reputation & customer service. Further, there are no entry barriers in this industry & any expansion in capacity of existing manufacturers would further intensify competition. However, economies of scale accrue to a few players & some of the major industry players are Jain Irrigation, Finolex Pipes, Kisan Mouldings & Supreme Industries Limited. Hence we recommend investors to Avoid this IPO.
