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Understanding what happened to LDEV price

+4
gfte
smallville
econ
babytrader
8 posters

Go down  Message [Page 1 of 1]

babytrader


Equity Analytic
Equity Analytic

Hi,

Just want to understand what happened to the LDEV price ?... it was trading around 80 when there was a rights issue of 15:1 @ 25.... now its trading around 30 after the rights XD date ... I am not sure that the shareholders of LDEV @ 80 price would have made a loss ???

can someone why they priced the conversion price at 25 ? when they have such a large share dilution... doesn't that mean that the person has to put in more money than the initial investment to keep the same shareholding ?

econ

econ
Global Moderator

babytrader wrote:Hi,

Just want to understand what happened to the LDEV price ?... it was trading around 80 when there was a rights issue of 15:1 @ 25.... now its trading around 30 after the rights XD date ... I am not sure that the shareholders of LDEV @ 80 price would have made a loss ???

can someone why they priced the conversion price at 25 ? when they have such a large share dilution... doesn't that mean that the person has to put in more money than the initial investment to keep the same shareholding ?

before XR share price 80 , right alocation 1:15,
there fore XR price should be around, (1*80 + 25*15 )/16 = 28.43
so now trading around 30 is about the same as according to the theoritical value.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

For you to reduce losses or to have some gain (Even if you buy at 80), u gotta ask for rights trading..
Rights are gonna list on 5th or 6th.. so Before rights if the share price goes up to at least 33-35.. the right price may start with 5-7..

so if u have 100 shares u bought at 80;
Initial investment cost = 80*100*101.12% = 8089.6/-
Sell off shares @ 30 on XR = 30*100*101.12% = 2966.4/-(removing broker cost)
Ur eligible for 1500 rights;
So Selling rights @ 6 = 6*1500 = 8899.2/-(removing broker cost)

Your total gains = (8899.2+2966.4)-8089.6 = Rs. 3776/-

The above assumes rights would trade at Rs.6/-....



Last edited by smallville on Sun May 01, 2011 8:44 am; edited 1 time in total (Reason for editing : small typo corrected)

gfte

gfte
Senior Equity Analytic
Senior Equity Analytic

a small re arrangement, of above post


Mr. Smallville already corrected

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Dear Smallville

Just another clarification, how about the price of a right issued (i.e Rs 25/- and not shown in your calculation). I too got some better understanding on rights recently.I am may be wrong. Hence look forward for a clarification on my point.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

pushpakumara wrote:Dear Smallville

Just another clarification, how about the price of a right issued (i.e Rs 25/- and not shown in your calculation). I too got some better understanding on rights recently.I am may be wrong. Hence look forward for a clarification on my point.

The calculation's Main idea is to sell rights as rights..

Right is your portion of the deal holding shares as at the XR date, so ur eligible for rights for the shares u held.
Now what u do it is; u ask rights to be renunciate to CDS and not to convert to shares by paying the Rs.25/- So there was no need of stating it..

So when the rights trading stars, it may have buy /sell prices which i hope will at least start by 5 and increases depend on the current LDEV voting share price..
If LDEV Stays up 35, converting a right bought at 6 costs u 6+25 = 31 so still its attractive.. But if rights failed then the whole calc fails.. so be aware..
This is just an illustration Wink

banarahu

banarahu
Manager - Equity Analytics
Manager - Equity Analytics

good explanation smallville.......... (+) rep

Two options,
If you have money in hand then hold and convert rights to shares for 25 rupees or
calculate the price and sell the rights in a best price and escape...

I also have to check and do one of these in the particular day Smile

most rights prices starts at high level and going down and down quickly. so carefully check and take the quick decisions...

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

I beleive its not necesary to convert rights to shares, the best option I see without putting additional money is to straight away ask for rights trading.. and sell at a good price calculating your profits for varoous price levels..

I've already done my calculations and just wanted to show u guys how u can make some profits too..

One thing to be noted, this is not an investment by any means and not in my nature too.. I just jumped in at the last day realizing a quick buck can be made to cover a small financial need. Other than than I'm not into these and do not encourage you guys to go after these too.. Wink

chamarahs


Manager - Equity Analytics
Manager - Equity Analytics

Very Happy

ssuni

ssuni
Manager - Equity Analytics
Manager - Equity Analytics

smallville wrote:Other than than I'm not into these and do not encourage you guys to go after these too.. Wink

why do you said like this???

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

ssuni wrote:
smallville wrote:Other than than I'm not into these and do not encourage you guys to go after these too.. Wink

why do you said like this???

I dont encourage anyone to do trading or go behind speculations.. Investing is the mantra for me..
I only do trading for short term finance needs.. That even i do calculating my potential return.. So any1 new to the market has to bear in mind speculative shares have so much risks in it.. so ur playing with fire sometimes..

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

smallville wrote:
pushpakumara wrote:Dear Smallville

Just another clarification, how about the price of a right issued (i.e Rs 25/- and not shown in your calculation). I too got some better understanding on rights recently.I am may be wrong. Hence look forward for a clarification on my point.

The calculation's Main idea is to sell rights as rights..

Right is your portion of the deal holding shares as at the XR date, so ur eligible for rights for the shares u held.
Now what u do it is; u ask rights to be renunciate to CDS and not to convert to shares by paying the Rs.25/- So there was no need of stating it..

So when the rights trading stars, it may have buy /sell prices which i hope will at least start by 5 and increases depend on the current LDEV voting share price..
If LDEV Stays up 35, converting a right bought at 6 costs u 6+25 = 31 so still its attractive.. But if rights failed then the whole calc fails.. so be aware..
This is just an illustration Wink

Thanks for the clarification.

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