For readers of my blog this is not a new news. I have not been a fan of any businessman who is more into ‘market capitalisation management‘ rather than business management. When the Reliance Power IPO came at Rs. 450 I did not apply though of course there are many people who applied.
I wrote this EVEN BEFORE the issue that if NTPC was priced at Rs. 240, the correct price for a new company should be in the range of Rs. 75, not Rs. 450. Of course many people laughed. N0w there is a new gimmick of merger….none of the actions by this group is helping the cash flow situation of this group. It is making losses in Rcom, the Media companies are still investing. The lucrative Bombay franchisee is seeing intense competition from Tata Power which has a cost of production of Rs. 1.8. Reliance insurance and mutual funds will not make money – there are no more NFOs anymore….God bless the market capitalisation.
Also for me this was a good example – the promoters had taken the shares of Reliance Power at Rs. 16 (not sure). I used to tell my friends the price is Rs. 450, and the value is Rs. 16.
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