Street signs: Gains for RIL RE investors, SBI Life Insurance OFS, and more

Gains for RIL RE investors  

Investors who participated in the Rs 53,124-crore rights issue of Reliance Industries (RIL) through the rights entitlement (RE) route are set to make handsome gains. The cost of acquisition of one partly paid RIL share works out to around Rs 537 and includes the rights issue initial 25 per cent payment of Rs 314.25 and the RE acquisition cost of Rs 223. The market is abuzz the partly paid-up shares will list above Rs 600 apiece. Going by Friday's closing price of Rs 1,589 of RIL, the intrinsic value for the partly paid shares is Rs 397. “Given the pent-up demand from the rights issue, investors will be willing to pay a premium to buy the partly paid shares. The partly paid shares carry all the benefits of fully-paid shares (in proportion to the amount paid). The acquisition price is locked at Rs 1,257 even though the remaining 75 per cent payment has to be made by November 2021,” said an investment expert.

Arbitrage gains in SBI Life OFS 
 

Brokers are advising their clients with high-risk appetite to subscribe to the SBI Life Insurance offer for sale (OFS). About 2.1 million shares reserved for retail investors — those investing up to Rs 200,000 — will be auctioned on Monday. The floor price for the share sale has been set at Rs 725, a discount of 3.5 per cent to SBI Life stock’s Friday’s close. The institutional portion of the OFS garnered good response on Friday with demand of more than two times the shares on offer. “If the stock price holds above the floor price, investors can make quick arbitrage gains. Otherwise, too, the OFS price is a good entry point for long-term investors,” said an analyst.

Covid silver lining for IT firms
 

A mid-sized IT company that has filed for an initial public offering (IPO) believes the Covid-19 pandemic offers a “silver lining” to the information technology (IT) sector. In its offer document, the firm has cited successful implementation of work-from-home policies, increased spends on automation and R&D, and fresh push for outsourcing as some of the factors that will benefit IT companies. On a year-to-date basis, the BSE IT index is down 7 per cent, outperforming the Sensex, which has declined 18 per cent.