Reliance Power Bonus

Reliance Power has remained in controversies at every stage, even before it was conceived and even after the public issue. Certainly enough, the public issue was not a reason to the recent damp in the market, but unfortunately Reliance Power became scapegoat for the crash.

Many guesses were made about the listing price , and one of guess was that if Anil Ambani could keep the price of Reliance Power above 900-00 , he would be richest person. Thus before the IPO premium was nearly 400-00+ but soon after the market crash all the premium and high hopes for listing above 900-00 were vanished.

After the listing Reliance Power has been available below the issue price of 450-00 and the investors are cursing the management for it, as if the company could really tackle the pricing in the market.

Now, the management has come up with a novel and generous idea of issuing bonus shares, only to public, and not to the promoters, to cover the short term losses of the investors .

This generous gesture of the company has made me say , wow!! Reliance Power has been really amazing company in every respect. The company collects 44 times more premium on its face value, which has no business, no assets at the moment going to public, earliest project will commence after nealry 4 years, still IPO is oversubscribed 70 times or more, finds its place in Future and Option segament from the first day , traded below issue price, and then bonus issue from nowhere.

To me, the move of issuing bonus share is perhaps simply to encourage price hikes. More particularly, as the management is issuing bonus to only to public which is wise move, other wise a bonus issue to all the shareholders, increase share capital and dilute earnings.

So, one can expect good price move in Reliance Power in short term. Which will give opprtunity to exit from the scrip.