REC: Is the Retail Investor Missing Out

Before the Reliance Power IPO a lot of investors seemed to be sitting out of IPOs for some totally different reason; to avoid the anguish of not getting allotment. But post the Reliance Power IPO, the same investors are staying away from the fear of getting an allotment and a volatile market.

It seems like the retail investor is missing out on a decently priced issue. As of the 3^rd day it has been subscribed only 0.78 times in the retail section. Also the PE of the stock is quite lower than that of the currently listed Power Finance Corporation (PFC). The lending exposure of REC has also improved with a 27% share of power generation projects in its portfolio. With a strong thrust on Power related projects on which India’s future depends this seems like a decent stock if not one of those star performers.

Download the Prospectus.

DISCLOSURE: All investment decisions have to be taken only after sound advice from a registered financial consultant. This blog is in no way responsible for any investment decisions and exposure to the stock markets.

ADAG plans a new IPO... Will you get carried away this time?

There is news floating around that ADAG might file for DRHP with SEBI for Reliance entertainment IPO.

All about Reliance Entertainment.. (ADA Group)

Reliance Entertainment is spearheading the Group’s foray into the media and entertainment space. Reliance Entertainment’s core focus is to build significant presence for Reliance in the Entertainment eco-system: across content and distribution platforms.The key content initiative are across Movies, Music, Sports, Gaming, Internet & mobile portals, leading to direct opportunities in delivery across the emerging digital distribution platforms: digital cinema, IPTV, DTH and Mobile TV.Reliance ADA Group acquired Adlabs Films Limited in 2005, one of the largest entertainment companies in India, which has interests in film processing, production, exhibition & digital cinema.
Reliance Entertainment has made an entry into the FM Radio business through Adlabs Radio www.big927fm.com Having won 45 stations in the recent bidding, BIG 92.7 FM is already India’s largest private FM radio network with 12 radio stations across the country as on 28th February 2007, with many more to be launched in the coming months.

I'll surely think twice before applying for this one. How about you?

Regards
HM

Reliance Power and a frivolous excuse

Reliance Power today came out saying that global factors were to blame for it's IPO listing so terribly. Is it really so? It seems that the promoters have gone too far with their optimistic pricing and have been victims of their own game. Deep analysis shows that promoters after all have made money already and retail investors are left in the lurch.

By going through some reports about their current and projected capacities, NTPC seems to be available at a really cheap market price. How does one justify the excuse given as "global factors" when all of them or atleast most of the future projects are going to be based in India. So it seems not only they factored reasons core to their future plans but buoyancy in our capital markets rake in some moolah. Surely lot of the investors got allured by the Reliance brand name and especially a lot of them who got their demat accounts opened only for this IPO. This will not go well with the first time investors and create a general negative sentiment regarding the Reliance pack among these people.

Are the promoters only to blame for this? Reliance Power has for sure consulted the bankers before coming out with this issue. It depends upon the bankers to come up with a fair price for the Reliance Power IPO. Do they really feel that was a fair price band based on the company's growth prospectus keeping in mind the domestic focus, then why blame global factors.

Credit has to be given to the promoters about marketing the issue well for the retail investors. A discount on the upper limit and full payment not being required at the time of subscription. Oh yeah, that's sweet, it was for me too.

One hard truth is, a lot of investors have lost money and hopefully the ADAG group gives us some reasons to cheer in the future.

IPO party may be over !!

IPO (Initial Public offering) was the most happening thing or rather something which attracted almost everyone in last few months. Every Tom, Dawood or Hari with no knowledge of the actual business or the profit margins of the company was more than willing to apply the maximum number of shares offered to a retail investor.

Well, Markets did not play a spoilsport either. Most of the IPO's listed in last few months have made the retails investors happy by not only giving handsome gains on listing but also sustaining the levels. Few examples in last couple of months would be Burnpur cement(listing gains of 350%) (I still regret not applying for this one), Edelweiss Cap(100% premium), Allied Computers (current gains of 191%).

But, as they say Grass is not always green. The present day scenario is a complete different story. The events that took place in last few days are more than terrifying,,,

a) Wockhardt recalls the IPO after poor subscription.
b) Emaar MGF recalls as well.
c) Future Capital (IPO that was oversubscribed 130 times opens with a small premium of 40%)
d) Reliance power (ADAG company), most talked IPO of the year so far falls flat on its face. (closes below the issue price.)
e) J Kumar Infra (listed today and currently trading with a loss of 18%)

I personally applied for both Future Cap and Rel Power, not bothering much about the business model or current valuations or future growth plans. And here I am (always hoped for booking huge listing day profit), sitting with a mere 20% gain on Future Cap and still trying to cope up with the Rel Power disaster.

Lets hope to see those 500+ trading sessions in near future which may bring smiles back for many small investors.

Till then Happy Investing :)
Hanif Merchant