RIL-RPL swap ratio evokes mixed response from market
The merger ratio of Reliance Petroleum with parent Reliance Industries has drawn mixed reactions from the stock market.
By ET Bureau |
MUMBAI: The merger ratio of Reliance Petroleum with parent Reliance Industries has drawn mixed reactions from the stock market. Even as analysts say that the ratio is along expected lines, they add that it might not be an immediate positive for RIL shareholders.
Upon completion of the amalgamation, shareholders of RPL will receive 1 fully paid equity share of Rs 10 each of RIL for every 16 shares held by them on the record date to be fixed by the transferee company.
���The ratio is very much on expected lines and is slightly negative for RIL shareholders. But if we look at it from cash flow, tax and timing angle, it was a good move that will benefit RIL. However, the fundamentals will not change immediately and there is expectation that stock might remain weak in the near term partly due to weak global sentiments,��� Mehraboon Jamshed Irani, senior vice president- PMS, Centrum Broking
Monday, the RIL stock was trading at Rs 1,238, down 2 per cent from the previous close while RPL was trading at Rs 76, almost flat in early trade at a time when Sensex was down over 2 per cent.
Hansal Thacker, executive officer, Lalkar Securities, says, ���The swap ratio is more beneficial to the RPL share holders. However, the picture would be clearer only after the press conference. For the investor community, it would also depend upon the treasury stock (or re-acquired stock), that is, that amount of outstanding stock in the open market that the company would reduce. This would put cash in the shareholder���s hands rather then paying dividends to them.���
Anita Gandhi, head of institutional business at Arihant Capital Markets, said, ���The swap ratio doesn���t throw much negative surprises. The fall in the RIL stock is more due to the overall fall in the market. We don���t see much of stock implication for RIL but the move seems to be slightly skewed towards the RPL share holders. Since there is no fresh treasury stock are created the equity base has increased which has unlocked value to the share holders.���
Upon completion of the amalgamation, shareholders of RPL will receive 1 fully paid equity share of Rs 10 each of RIL for every 16 shares held by them on the record date to be fixed by the transferee company.
���The ratio is very much on expected lines and is slightly negative for RIL shareholders. But if we look at it from cash flow, tax and timing angle, it was a good move that will benefit RIL. However, the fundamentals will not change immediately and there is expectation that stock might remain weak in the near term partly due to weak global sentiments,��� Mehraboon Jamshed Irani, senior vice president- PMS, Centrum Broking
Monday, the RIL stock was trading at Rs 1,238, down 2 per cent from the previous close while RPL was trading at Rs 76, almost flat in early trade at a time when Sensex was down over 2 per cent.
Hansal Thacker, executive officer, Lalkar Securities, says, ���The swap ratio is more beneficial to the RPL share holders. However, the picture would be clearer only after the press conference. For the investor community, it would also depend upon the treasury stock (or re-acquired stock), that is, that amount of outstanding stock in the open market that the company would reduce. This would put cash in the shareholder���s hands rather then paying dividends to them.���
Anita Gandhi, head of institutional business at Arihant Capital Markets, said, ���The swap ratio doesn���t throw much negative surprises. The fall in the RIL stock is more due to the overall fall in the market. We don���t see much of stock implication for RIL but the move seems to be slightly skewed towards the RPL share holders. Since there is no fresh treasury stock are created the equity base has increased which has unlocked value to the share holders.���
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