*India Special Situations: Rights Issue: Bharti Airtel (BHARTI IN) CMP INR 595 | Rights Price INR 535*
*Issue Size:* INR210bn
*Rights issue Price:* INR 535/share
*Rights ratio:* 1:14 (1 share for every 14 shares held)
*Structure:* Partly Paid Up
*Terms of payment :* 25% on application and balance in two more calls as may be decided by the Board / Committee of the Board within 36 months.
*Our View*
-A 'Special Committee of Directors' has been constituted to decide the other terms and conditions of the issue including Issue period and the Record date. *We expect the issue to go Ex in a month’s time frame.*
*-Partly paid up rights issue will offer holders like Passive, Active fund managers and Arbitrageurs a wide set of options to enhance yield. We have jotted down the various options below.*
*-Passive (Index/ETF) managers:* BHARTI is a part of MSCI, FTSE, NIFTY50 and SENSEX30 indices. As indices don’t permit to retain partly paid rights, passive managers will have to sell the renunciation forms (RR-forms) when the window for trading starts. From an intention of hedging, prior to the Ex-date (a day before), Index/ETFs can proportionately sell the shares based on the rights ratio (E.g. a holder of 15,000 shares should sell 1,000 shares on the day before it goes Ex in order to lock in the price for 1000 Rights that will get credited. Post selling, the shares in portfolio will be 14,000 shares which will entitle one to 1,000 Rights. Now on listing of the RR-Forms, unwind the position by selling the RR-Forms and buying back the 1000 shares in order to realign the number of BHARTI shares in the Index/ETF. In an event where the stock corrects at the time of trading of RR-Forms, the loss on the RR-Form will be compensated by buying BHARTI shares at lower price and vice versa).
*-Active managers:* Similar to RILPP IN, BHARTI partly paid up will offer holders an opportunity to hold BHARTI at lower value in the portfolio as against the fully paid up shares. The unpaid value on partly paid shares can be deployed elsewhere.
*-Arbitrageurs:* As an arbitrageur an efficient way to handle exiting position is unwinding position before the issue goes Ex if futures are trading at discount or par also as rights don’t add any additional benefit in a pure arbitrage strategy. However if one wishes to carry forward the position (if unwinding is not possible due to size or futures trading at premium), then one needs to sell additional futures on or before ex-cum-date. After the RR-Forms start trading, one can also explore arbitrage opportunities based on the carry available with relevant month futures.
*IIFL Alternative Research*
*Issue Size:* INR210bn
*Rights issue Price:* INR 535/share
*Rights ratio:* 1:14 (1 share for every 14 shares held)
*Structure:* Partly Paid Up
*Terms of payment :* 25% on application and balance in two more calls as may be decided by the Board / Committee of the Board within 36 months.
*Our View*
-A 'Special Committee of Directors' has been constituted to decide the other terms and conditions of the issue including Issue period and the Record date. *We expect the issue to go Ex in a month’s time frame.*
*-Partly paid up rights issue will offer holders like Passive, Active fund managers and Arbitrageurs a wide set of options to enhance yield. We have jotted down the various options below.*
*-Passive (Index/ETF) managers:* BHARTI is a part of MSCI, FTSE, NIFTY50 and SENSEX30 indices. As indices don’t permit to retain partly paid rights, passive managers will have to sell the renunciation forms (RR-forms) when the window for trading starts. From an intention of hedging, prior to the Ex-date (a day before), Index/ETFs can proportionately sell the shares based on the rights ratio (E.g. a holder of 15,000 shares should sell 1,000 shares on the day before it goes Ex in order to lock in the price for 1000 Rights that will get credited. Post selling, the shares in portfolio will be 14,000 shares which will entitle one to 1,000 Rights. Now on listing of the RR-Forms, unwind the position by selling the RR-Forms and buying back the 1000 shares in order to realign the number of BHARTI shares in the Index/ETF. In an event where the stock corrects at the time of trading of RR-Forms, the loss on the RR-Form will be compensated by buying BHARTI shares at lower price and vice versa).
*-Active managers:* Similar to RILPP IN, BHARTI partly paid up will offer holders an opportunity to hold BHARTI at lower value in the portfolio as against the fully paid up shares. The unpaid value on partly paid shares can be deployed elsewhere.
*-Arbitrageurs:* As an arbitrageur an efficient way to handle exiting position is unwinding position before the issue goes Ex if futures are trading at discount or par also as rights don’t add any additional benefit in a pure arbitrage strategy. However if one wishes to carry forward the position (if unwinding is not possible due to size or futures trading at premium), then one needs to sell additional futures on or before ex-cum-date. After the RR-Forms start trading, one can also explore arbitrage opportunities based on the carry available with relevant month futures.
*IIFL Alternative Research*
KEEP BOOKING PROFITS IN STOCKS WHICH ARE GIVING YOU GOOD RETURNS. DONT BE GREEDY, IF YOU WISH TO HOLD BOOK PART AND TRAIL REST.
Market Wizard
SUPER DUPER AGGRESSIVE BUMPER MID TERM CALL BUY COMPEAU (BSE - 531041) AT CMP OF 218 - 223 ADD MORE ON ALL DIPS TILL 195 SL 181 TARGETS :- 236 - 242 - 247 - 251 - 255 - 259 - 263 - 266 - 270 - 274+ ABOVE 274 WE CAN SEE 285 - 293 - 300+ DISCLAIMER:- I am…
SUPER DUPER AGGRESSIVE BUMPER MID TERM CALL
BUY COMPEAU (BSE - 531041) AT CMP OF 228 - 231
ADD MORE ON ALL DIPS TILL 210
SL 200
TARGETS :- 238 - 242 - 247 - 251 - 255 - 259 - 263 - 266 - 270 - 274+
ABOVE 274 WE CAN SEE 285 - 293 - 300+
DISCLAIMER:- I am not SEBI Registered. Please consult your financial advisor before investing.
BUY COMPEAU (BSE - 531041) AT CMP OF 228 - 231
ADD MORE ON ALL DIPS TILL 210
SL 200
TARGETS :- 238 - 242 - 247 - 251 - 255 - 259 - 263 - 266 - 270 - 274+
ABOVE 274 WE CAN SEE 285 - 293 - 300+
DISCLAIMER:- I am not SEBI Registered. Please consult your financial advisor before investing.
Market Wizard
SUPER DUPER AGGRESSIVE BUMPER MID TERM CALL BUY COMPEAU (BSE - 531041) AT CMP OF 228 - 231 ADD MORE ON ALL DIPS TILL 210 SL 200 TARGETS :- 238 - 242 - 247 - 251 - 255 - 259 - 263 - 266 - 270 - 274+ ABOVE 274 WE CAN SEE 285 - 293 - 300+ DISCLAIMER:- I am…
PERSONALLY ADDED 2.8K COMPEAU AT AVG OF 229.88