Query: Sir, I bought RNRL above Rs.200, I wish to know the facts and present status of RNRL? Naina Mishra
Thebullishtrends: We are not expecting any immediate upward movement in RNRL(CMP:Rs.90.10) share price.
Why is this stocks rising?Will it continue to rise?What does this company do?Should you invest in this stock?And there will be many more questions cropping up in your mind.
History of RNRLThis company was formed in year 2000 as Reliance Platforms Communications.Com Private Limited.Later it was made a public company in the name of RNRL after the split between ambani brothers.RNRL got the share of gas from RIL discoveries in KG basin.Currently as we see it this company doesn't do any thing, it paper company with rights of gas.
RNRL and RIL are fighting the gas share and its price from long time.
What RIL wants : Higher price realization for its gas.
What REL wants :- Long term sustained gas supply for its power plant at low cost.
What RNRL has :- Assured gas supply from RIL at low cost which is being battled it court.
Otherwise their is no real business of RNRL and no reason for its existence. No future businesses to hold other than some news of city gas distribution. This company is only being used as a leverage. If RIL and REL has gas they can directly start business which RNRL would plan so no real benefit of this company.
Future of RNRL depends on What Anil ambani wants to do with this company.If RNRL has tomake profits it has to sell gas at higher price to REL or Reliance Power.Then RNRL is profitable and REL(RPL) profit margin will reduce.Which company he wants to keep profitable would be his decision.Obviosly he will secure intrest of his bigger company with defined business model.
What holds out for RNRL. 1. If status quo is maintained , all the profits from gas coming into RNRL is factored in. Price hike is not possible because it is long term fixed price contract. Share price other than what trades speculate will not change much. maximum 20-30 rupees. No point in entering at this point if you don't already hold it.
2. RNRL is sold out to either company. Share price will fall or if it is delisted there will be share swap so instead of buying and RNRL and getting RIL in share swap go and directly buy RIL.
3. Unless RNRL gets new businesses like city gas distribution very little chance of appreciation.After all being said, Reliance stocks are currently fancy of traders and almost opposite can happen.But long terms bets are against it.
Ambani brothers have not come to one agreement within 4 months of the time. But both the brothers have not come to the settlement of the issue. Now the issue entered into the court stairs.
If you can wait for atleast 2-3 yrs then only you can continue your investments in this company, other wise you have to depends on the speculation.
