http://economictimes.indiatimes.com/R-Power_plans_bonus_to_win_back_investors/articleshow/2790920.cms
The financial acumen of ADAG is truly brilliant. They have carefully crafted a way to increase the valuation of the REPL by offering the bonus. The scrip has already risen some 10% after the news of a possible bonus issue.
Looking at the numbers, the existing shareholding report on the REPL website mentions a promoter share of 89.92% while institutional and retail investors have 10.08%
At 1:1 bonus issue, the share of the external investors will be 10.08 x2 / (10.08 + 100) = 18.31%, or a rise of 8.23%
At 1:2 bonus, it will be 10.08 x 1.5 / (5.04 + 100) = 14.39%, or a rise of 4.31%.
This implies that even in the bearish market, REPL has found more takers than the numbers suggest. A rise in price directly translates into higher networth of the promoters, who are laughing all the way to the stock exchange :D
1 comment:
So they have declared a bonus issue of 3:5. Lets look at the numbers.
Lets assume there were 100 shares of REPL before bonus issue
Promoter stake before split = 89.92 Non promoter = 10.08
After the bonus issue of 3:5
Non promoter stake = 1.6x10.08
= 16.128
% non promoter stake = 16.128 /
(89.92+16.128)
=15.21%
Gain to non promoters = 15.21-10.08
= 5.13%
The scrip has risen much more than the above 5.13% after the news!
Since the stock market price reflects the total valuation of the company, the promoters stand to gain by this
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