Business Daily from THE HINDU group of publications
Tuesday, Feb 19, 2008
ePaper | Mobile/PDA Version
Business Daily from THE HINDU group of publications Tuesday, Feb 19, 2008 ePaper | Mobile/PDA Version |
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Power Markets - Bonus Announcements
BL Research Bureau
Reliance Power’s announcement that its board will be considering a bonus offer when it meets on February 24 had the desired effect on the stock in Monday’s trading. The stock closed 7.5 per cent higher at Rs 413.65 on the Bombay Stock Exchange with an intra-day high of Rs 429. What the company is proposing to do is return a part of the premium that it collected from shareholders during the IPO, in the form of bonus shares. The net effect will be to reduce the cost of purchase for retail shareholders who could be feeling dismayed by the turn of events since its listing. Ordinarily, post-bonus, the share price has to settle proportionately lower based on the number of bonus shares being issued but the company must be hoping that there will be a premium on the stock thanks to the market’s fascination with bonus offers. By announcing the intention a week ahead of the board meeting Reliance Power is also probably banking on speculative activity surrounding the bonus ratio pushing up the stock price in the next few trading sessions. The extra fizz might just push the stock past the offer price and offer a chance for retail shareholders to bail out. More Stories on : Power | Bonus Announcements
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