Yesterday night I received a message from one of my friend on my cell phone which read like this – Latest Blockbuster movie “Saare Zameen Par”, premiere on BSE and NSE, produced, directed and acted by Ambani Brothers! Jokes apart, if such a movie comes out I don’t have the slightest of doubt that it will give all the Indian movie directors and producers a run for their money. The message stands completely true to what it says and as of now the show on Indian bourses is run predominantly by Ambani Brothers. Take any reliance stock and you will see that all of them outperformed Sensex last year in terms of return. Any stock to which the prefix Reliance is added finds a unique flare among investors. Now the big question – What is that makes Reliance Stock such a big favorite? Just one thing ‘smart quick return and assurance’!

When it comes to returns to shareholders, Reliance Stocks has enough depth and strength to take any stock listed on the exchange to take it heads on. All fundamentals and research reports dynamics comes to stand still when the question of valuing a reliance stock arises. Even knowledgeable investor does not care to take a look at IPO Notes and the valuation of Stock when they are trading in reliance stock. If we consider reliance Power IPO which closed yesterday and received a mind blowing response from investors, even investors who didn’t had any idea about the business of the company doled out huge chunk of money for the IPO application. Evern Mr. Ambani must not have expected it to be such a great hit. Analyst were predicting that the IPO may be subscribed ~ 6-7 times in retail due to its mammoth size but the faith of retail investor in ADAG has something extraordinary to speak. Defying all analyst projections the IPO was subscribed ~ 16 times in retail. Getting one lot (15 shares) as an allotment will not be an issue for small investors but for those who were expecting more than that will have to wait as they will have to buy it on listing.

Coming back to the supremacy of Reliance on Stock exchanges, both the Ambani brothers are the undisputed leaders of stock market. After the separation of two brothers, there is a mad race between Mukesh and Anil to increase their wealth and move up the ladder. Due to their fight, investors had made huge money from their soaring stock. For example, companies like Reliance Petroleum Limited which has not started production yet is traded at par with other peers. Reliance stock are no more bought on the basis of calculations and fundamentals whether it is a bulk deal or an investment by mutual fund or small trader. All the top funds, PE houses and FII are craving to buy a chunk of Reliance shares because this is a stock which moves irrespective of market reactions. If we go by fundamentals, all the stocks of reliance are overvalued due to huge demand. In the wake of this, analyst are having a tough time as they are forced to under rate the stock as they don’t find anything substantial in it. Few of the brokers had underrated Reliance Power IPO calling it over priced if we go by fundamentals but the response of investors shows it all that they don’t go by reports and valuations when it is about reliance.

Ask any investor and the he will give you a prompt response for the Reliance Power IPO (new flick) which is two weeks away from hitting the stock markets (Box Office). All hands up and there is not a single doubt among investors that stock will give a smart return. I feel it is too early to pass any judgment regarding that and I would prefer to wait till the listing of stock to give my views on it. One thing is sure that there would be around 70 – 80 % premium on the day of listing but since all the new investors who had put in money are looking for listing gains only with a short term approach, I expect some correction in the stock after the day of listing. If the price of the stock goes down after the day of listing, it would be a good opportunity for long term investors to buy from the secondary market as I see a lot of upside in the stock for a long term investor.

The success of Reliance Power also shows that Indian bourses are much matured know and are ready for mega billion dollar IPOs.The Reliance IPO which attracted maximum number of applications so far anywhere around the globe clearly depicts the might of ADAG.The IPO broke all records of not only Asian or Indian bourses but all the stock markets across the globe in terms of subscription.The confidence of retail as well as institutional investors has developed manifold with the ascent of time in primary market. The IPO has also left good number of lessons for the business houses – The way this IPO was marketed by ADAG is really commendable and the recall value of IPO was such that even housewives (I was really taken aback when my sister called me up to dive into the IPO details) and people who are away from market could be roped in to invest in this mega IPO.

Both Mukesh and Anil Ambani has carried over the legacy of Late Dhirubhai Ambani is an appreciable way and has also made India proud in the international arena by posing challenges for entrepreneurs around the world giving them a tough competition. Gone are the days when Indian companies could not make their way to Forbes list and the who’s who of the world. If Reliance Power crosses the 1000 mark on the day of listing, it is expected that the wealth of Mr. Anil Ambani will be way ahead of Mr. Mukesh Ambani which is estimated to be ~ $ 75 billion. Who knows Mr Anil Ambani may become the richest person on earth for a while!

Great show by Ambani Brothers!
Complete paisa wasool!
Rating *****

The views expressed are personal and the author is not a stake holder in Reliance Power. For any queries, you may write to amitkhandelia@yahoo.co.in.

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