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Saturday, January 15, 2011

RNRL & Reliance Infra punished by SEBI : Would Rpower be affected?

SEBI has passed a consent order regarding the Reliance Infra, RNRL investigation which showed misrepresentation of investments.

Reliance Infra, RNRL, Anil Ambani and four other directors have paid settlement fees of Rs 50 crore towards the consent order.

Reliance Infra and RNRL can't make investments in the secondary markets up to December 2012 following this order by SEBI. And Anil Ambani and four other directors have been barred from investing in secondary market until December 2011.

This is bad for reputation of the group (Anil Ambani comanies) of course. RNRL has been barred for 2 years for making investments in secondary markets. Similarly, Anil Ambani has been barred for 1 year, directors getting barred is definitely not a good sign. Group has been facing problems for raising money mainly because of high valuations and this incidence could make matters more difficult for companies like Reliance Power.

Reliance power has a program to reach the capacity of 15,000 MW by 2015. It needs to raise at least 100,000 crores for this. So it will be interesting to see if this punishment comes in way of RPower as RNRL has got merged into Reliance Power now.

Interestingly, RNRL has been barred from secondary markets but not from primary markets. It might give some relief to company for fund raising plans. Company still have access to primary market.

If investors react negatively to this incidence, there are chances that Rpower shares may correct on back of this. Rpower investors who are ready to wait for 4 - 5 years might want to consider to buy stocks of company once the picture gets clearer on Rpower front and if stock is available at cheaper valuations.

1 comment:

  1. Hi, Good article.
    I think if R-Power comes below 100, may be worth investing.
    But again, even though India is power deficit country, does these private companies have any real pricing power in electricity in Govt. controlled prices.
    Have a look at oil marketing companies.
    And mind you, by increasing Petrol price by 2/3 Rs. OMCs cant make up for losses of corers daily.
    This is my personal view.
    With Regards,
    Vikas

    ReplyDelete

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