Mumbai, Jan. 18: Brothers Ambani ' Mukesh and Anil ' today formally carved up the Rs 100,000-crore empire that patriarch Dhirubhai had started to build almost 30 years ago.
The carve-up had come into effect on December 21 but officially took place today with Reliance Industries allowed to trade in a one-hour special pre-market session to discover the price.
The price of the rump stock was set after slicing away the value of the four businesses '- communications, financial services, and coal and gas related energy businesses ' that have gone to Anil Ambani as part of the demerger plan that was devised last August and went through a protracted process of court and regulatory approvals.
At the end of the session, the Reliance stock beat market expectations to close at Rs 713.95 on the Bombay Stock Exchange and Rs 714.35 on the NSE, a “price haircut” of about 23 per cent from Tuesday’s close of Rs 928.
“I am delighted that the demerger of RIL has unlocked unprecedented value for more than 23 lakh Reliance shareholders,” the younger Ambani scion told reporters.
The process of price discovery for the core business of Reliance Industries ' it will now concentrate only on refining, petrochemicals and textiles ' through a special trading session has never been attempted anywhere in the world.
Punters quibbled over the process but agreed that it was the only way this could have been done without dragging financial accountants into it and possibly sparking even more controversy.
“I hope we never attempt something like this again,” said a market analyst.
Anil Ambani claimed that RIL’s market capitalisation had increased by over 50 per cent since June 2005, outperforming the sensex by nearly 20 per cent. He said it added a record Rs 55,000 crore to shareholder wealth in a short span of seven months.
“RIL’s stand-alone post demerger market capitalisation is 15 per cent higher than its pre-demerger market cap, and 23 lakh shareholders will further benefit from shares in the four ADAE group companies -- Reliance Communications Ventures, Reliance Energy Ventures, Reliance Natural Resources and Reliance Capital Ventures Ltd,” he said.
Anil thanked RIL and its board of directors for implementing the demerger process “advocated by me, in the best interests of fairness and transparency and good governance, and to maximise the value for RIL’s 23 lakh shareholders, the true legacy of our founder chairman (late) Dhirubhai Hirachand Ambani.”
The day had begun with great excitement at 8 am when the special trading session began. Huge investor interest saw turnover at the RIL counter touching around Rs 4,300 crore, almost a billion dollars, on the two bourses.
“During December, the average traded volume at the Reliance counter was around 25 lakh shares. However, in the special trading session held today, more than 1.96 crore shares were transacted in one hour alone,” said V.K. Sharma, head of research at Anagram Stock Broking.
Before the special trading session began, marketmen had expected the rump Reliance stock to quote at around Rs 650 ' but it became quickly clear that they had underestimated the bellwether stock which until yesterday had a weightage of 12.4 per cent in the 30-scrip sensex.
The core Reliance stock opened at Rs 702.90 and hit a high of Rs 727.75. It later ended at Rs 715.50 per share after which the weighted average of the scrip was fixed at Rs 713.95.
On the NSE, the weighted average was put at Rs 714.35. In the regular trading session that followed on the BSE, the Reliance rump fell by Rs 20.10 to Rs 693.85 at the close from the “discovered” price of Rs 713.95 in the special session.
The sensex caught the Asian flu from the floundering Nikkei and other Asian indices and tumbled 76 points to close at 9237.53, recovering from a fall of 155 points earlier in the day. The Nikkei posted its biggest ever one-day percentage fall since April as it plummeted 464.77 points to 15,341.18, prompting the Japanese authorities to stop trade 20 minutes early to prevent its system from being inundated by orders.
Where does the Reliance rump stock go from here' Analysts say it could cross Rs 1000 in the next few months as the full value of all its business opportunities are realised. "The retail plans of the company have not yet been revealed. When Reliance initiates its action in this field, the stock price could certainly look up," said an analyst with a foreign brokerage who did not wish to be named.