ADAG group will become poorer with the listing of Reliance Power

ADAG which refers to Anil Dhirubai ambani group is all set to crumble under its own feet.
ADAG group has aggressively priced their shares leaving nothing on the table for appreciation to the IPO subscribers for another 10 years. The 5% discount to retailers was only a bait which many people have bitten under the assumption that Reliance shares will rise by 100-200% on the listing day. However a crefull analysis of the company tells us a different story.
The company’s shares are priced at multiples far higher than existing players with proven track record like NTPC and tata power.
Reliance power has promised the generation of electricity in future and has nothing to show at the moment.
It looks like they have over leveraged their own family name and are all set to plunge many IPO subscribers into losses that cannot be recovered in another 5-7 years (again a distant dream).

RPL, RNRL are best examples to cite where irrational exuberance is at play. These companies are not even generating any revenues and are commanding market cap in thousands of crores. This represents the mad faith in Ambani groups and may take a beating following Feb 11th when Reliance power shares start trading.

What ADAG and MDAG are good at doing is, break up money making entities into holding companies. They have successfully done this before only to inflate their businesses and are rapidly increasing their paper wealth.
Look at RPL, where checvron took a small stake around RS 60 per share. The business didn’t even start and the price of the stock jumped more than 300%. Chevron was supposed to take additional stake and the investors were bidding the shares even higher in the hope that chevron will buy at the higher price. Smart Chevron backed of saying that it is too expensive. I wouldn’t be surprised if chevron booked profits and sold their existing stake instead of buying new stake. Adding to the agony of common investor, Mukesh group has sold their 5% stake in their own company RPL in open market and booked profits at the expense of common unwary and gullible investors.

Reliance power listing in all my honest opinion will turn the tide against Anil Dhirubhai ambani and wil be one of the heavily shorted shares on dalal street. I wouldn’t be surprised to buy Reliance power shares for less than RS 100 in few months to come.

The mood is SELL SELL SELL a typical Cramer style.

Filed under: India blogs, Indian Bloggers, ADAG, Anil Ambani, FEB 11 2008, IPO, Reliance Power, Reliance power IPO