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Reliance Power – Most Expensive Offering

January 9, 2008

On the first look, the Reliance Power IPO looks like the most expensive IPO. In race to beat his elder brother Mukesh Ambani, Anil is raising money at a premium on ventures still on Paper and Brains 🙂

IPO money is being raised to execute about 7,000 MW of capacity expected to go on stream by 2012. If all goes perfectly [Remember, this is Anil Ambani’s first Manufacturing Mega Project and he has no experience in executing such projects on his own], Reliance Power will have revenues of Rs 7,600 crore, EPS of roughly Rs 8 and a book value of Rs 70. At the listing price of Rs 850, the stock would be trading at a 2012 price-earning ratio of 105, a price to book value ratio of 13 and a market cap to sales ratio of 26. Kindly remember these are four-year forward ratios.

As I have already said above, Anil has more plans in his brains and will only let them out once the Reliance Power stock is listed [Getting into manufacturing of Power Equipments etc] Its a MAD MAD MARKET for sure 🙂

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