Is it worth investing in Reliance Power ???

The reliance power is making news across the country. It is the biggest ever IPO in India. One of the largest which hit indian markets was DLF. But it never got the response reliance power is getting. At present there are 3 IPOs in the market
1. Federal Bank
2. Reliance Power
3. Future Capital

Federal Bank is the least talked about because it is nowhere in the online application. It was just through the paper form. I just got to know about it from today’s “Times of India”. I had no clue about it and have not analyzed it.

The other two present pretty interesting story. Reliance Power is Anil Dhirubhai Ambani company. While the other one is by Future group. If you look at the grey market premium
Reliance power is at 90% and Future Capital at 75%.

The over subscription of Future IPO is 27 times while till now reliance powers IPO is at 10.5 times and we can safely assume that it will definitely be oversubscribed more than 30 times.

Now if I apply simplest of mathematics and assume that one has invested 100000 Rs then at 27 times he will get stocks worth 100000/27 = 3700 Rs. Similarly for 100000Rs in Reliance IPO he will get 100000/30 = 3333 Rs.

Now taking the grey market premium at present situation the returns would be :

Reliance Power: 3333 * 0.9 = 2999 Rs
Future Capital: 3700 * 0.75 = 2775 Rs

Which is approximately just 2.77 % and 2.9% of Rs 100000.

If I assume reliance power’s partial payment option then reliance would look much better ( Rs 2999 on Rs 25000 investment which is approx 11.99

So are these IPOs worth investing? Cant an retail investor earn more by investing directly in the market.

Finally for any of the above gain to occur you need to be lucky to get the stocks first….

Best of Luck to all the Investors…………