Bonus no respite to RPower shareholders as stock trades well below adjusted cost of acquisition

Reliance Power was trading at Rs 237.25 at 15:04 IST on BSE, which is still below the adjusted cost of acquisition of Rs 269 for retail investors and Rs 281 for institutional investors.

The stock became ex-bonus today. The stock opened at Rs 308.95 on BSE. It hit a high of Rs 309.40 and a low of Rs 231.70 so far during the day. The stock had closed at cum bonus price of Rs 409.55 yesterday, 29 May 2008. The company has set 2 June 2008 as the record date for a 3:5 bonus issue.

The stock had a 52-week high of Rs 599.90 on 11 February 2008 and a 52-week low of Rs 303.45 on 24 March 2008 (cum-bonus prices).

The scrip had outperformed the market over the past one month till 29 May 2008, rising 1.80% compared to the Sensex's decline of 5.62%. It also outperformed the market in the past one quarter, sliding 4.89% compared to Sensex's decline of 7.18%.

The face value per share is Rs 10.

In a meeting held on 25 February 2008, Reliance Power's board of directors had approved 3:5 (3 bonus shares for every 5 shares held) bonus issue to all shareholders, excluding the promoter group comprising of Reliance Energy and the Anil Dhirubhai Ambani Group (ADAG). The promoter decided to waive their entitlement to bonus shares.

Meanwhile, Anil Ambani decided to transfer his 2.6% in Reliance Power to Reliance Energy so that Reliance Energy maintains its holding at 45% in Reliance Power after the bonus issue.

Following bonus issue and personal stake transfer by Anil Ambani, the cost of acquisition of Reliance Power stock will come down by 40% for retail shareholders to Rs 269 per share from issue price of Rs 430 per share, Reliance Power had said at the time of the bonus announcement. In the same way, for other investors the acquisition cost will be reduced by 37% to Rs 281, from issue price of Rs 450. The Rpower stock managed close barely above issue price of Rs 450 at Rs 450.40 only once on 25 February 2008. The bonus issue was declared to compensate shareholders following poor listing of the stock on bourses.

Following this bonus issue, Anil Ambani's stake will come down to 40% from the present 45% in Reliance Power. Reliance Energy's shareholding remains unchanged at 45% while public shareholding will increase by 5% to 15%.

Reliance Power is developing 13 power generation projects with a capacity of 28,200 megawatt (MW).

Reliance Power reported net profit of Rs 94.67 crore on total income of Rs 132.87 crore in the year ended March 2008.