Every body has to take their share of blame for the dismal performance of Reliance power shares. To start with, i would blame Anil Ambani, investment bankers and all those analysts who pumped up the stock in the hope of bumper listing.
Due to bumper listing of several IPOs, value investors were sidelined for long now and momentum investors took front seat and technical chartists were revered.
THe right way for Anil Ambani was to do private placement and raise money to get the projects started under Reliance Energy fold. However, seeing the boom period Anil ambani lost his senses and wanted to make a quick buck just like a normal trader.
He quickly made Reliance Energy a holding company and shifted power related projects to Reliance Power and floated another publicly traded company by filing IPO.
The original price was around RS 180-RS 200 few months ago and don’t know, how and why they came up with RS 450-RS 480 range for this Company with no revenue to show, no concrete contracts for sourcing GAS, Coal for these projects. Anil adamantly didn’t listen to any suggestions for private placement as he thought the stock market will give him the right price. By offloading 10%, he was dreaming to get more value for his 90% share holdings and quickly wanted to become richest Indian.
There are many risks in completing the power projects and there will be too many negative trends for this company going forward.
By 2013, the cost of power per watt may become cheaper due to Rupee strengthening and there could be lot of competition from wind power, solar power providers.
So, i certainly can buy Anil Ambani’s shares for less than RS 100 going foward.
I suggest that we should all avoid any IPO led by tainted investment bankers of Reliance IPO.
I suggest you do both fundamental and technical analysis before investing money in stocks.
I am afraid, my earlier prediction of Reliance group promoters becoming poorer by their recent highly pumped Reliance Power listings coming true.
Certainly the investors are to be blamed for thier losses in Reliance Power.
