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Sunday, October 12, 2008

Reliance Power - Stock To Buy ?

Lot has been written since the IPO of Reliance Power. Is Rpower a Stock To Buy? Should one be investing in stock or not? Would I get any returns on my investments since company would be having it's "production" in maybe 2012 - 2016, shall we wait to BUY shares or shall we start investing in this? So many questions ..... And one who is really interested in making money in Indian stock market would definitely not igonore this investment opportunity, looking at the strong "POWER PACKED" back up of Anil Ambani. :)

Looking back to history, Reliance had always made money in business and not only for it's promoters but for people, there are millions in India who have benefitted from Reliance shares. Way back in 1970's, it was infact Reliance who generated the interest among common people and created wealth for them.

Neways, going back to Reliance Power, it is the company with BIG vision on Power sector. Atleast I feel so. Have a look at the business profile in Reliance Power official website.

Reliance Power Limited is part of the Reliance Anil Dhirubhai Ambani Group and is established to develop, construct and operate power projects domestically and internationally. The Company on its own and through subsidiaries is currently developing 13 medium and large sized power projects with a combined planned installed capacity of 28,200 MW, one of the largest portfolios of power generation assets under development in India. Our 13 power projects are planned to be diverse in geographic location, fuel type, fuel source and off-take, and each project is planned to be strategically located near an available fuel supply or load center. The identified project sites are located in western India (12,220 MW), northern India (9,080 MW) and northeastern India (2,900 MW) and southern India (4,000 MW). They include six coal-fired projects (14,620 MW) to be fueled by reserves from captive mines and supplies from India and abroad, two gas-fired projects (10,280 MW) to be fueled primarily by reserves from the Krishna Godavari Basin (the "KG Basin") off the east coast of India, and four hydroelectric projects (3,300 MW), three of them in Arunachal Pradesh and one in Uttarakhand. Reliance Power has acquired the two ultra mega power projects of 4,000 MW each at Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh. The 7,480 MW project to be located at Dadri in Uttar Pradesh is expected to be the largest gas-fired power project at a single location in the world. We intend to sell the power generated by these projects under a combination of long-term and short-term PPAs to state-owned and private distribution companies and industrial consumers.

It's a fact that it is Reliance Power who gave away the bonus shares from promoter's quota when stock fell down in bear market. No other company/management has done so in favour of shareholders. It was the biggest oversubscribed issue and all major Investment bankers had recommended & invested in it. Either all of them were intelligent enough to analyse the stock and understand the business or biggest idiots who cheated the followers. I don't know what to say. It is upto you.

If we look at the simple fundas always discussed for long term and value investments, they are:

Promoters Holding:
Anil Ambani and his companies: 84.78% of total equity (Source: BSE website)
This shows he is here to create wealth for himself too. If company gets richer so he and so all the shareholders.

Promoter profile:
Do I need to talk about Anil Ambani and his capabilities? He is one of the biggest wealth creators in India.

Business model:
Power generation and distribution is in the world for more than 100 years and the world won't be able to live a moment without power!! Look at the power crisis in India, all businesses and major chunk of people NEED & so WANT the non interrupted power supply at even higher rates than present market rates. Power generation business would be there till end of the world.

Looking at the recent developments like acquiring coal mines in Indonesia, it shows the business is going on.

It is not that Reliance Power would give you the returns in a month or two but it would surely be a multibagger in long run if looked as long term investment.

I have not written the article to praise the Reliance Power, but I am also one of those common investors who have invested in this counter in IPO. And from that day I have not even thought of making stock trades. I have kept it as long term investments in my Kitty and would keep adding chunks over the time period in future.

Please feel free to comment on this..

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