Rights issues and Hindalco
A good self explanatory link on Rights issues
Hindalco's case
“The ratio will now be three equity shares for every seven equity shares held”
Assuming that the Rs 96 paid for the 3 issue shares adds to the book value along with with the book value of the 7 existing shares, the issue price seems very reasonable and the reaction of the market seems excessive.
And at current prices, the stock seems to be selling below book value even assuming that the Rs 96 doesn't add to the book value.
Hindalco's case
“The ratio will now be three equity shares for every seven equity shares held”
Assuming that the Rs 96 paid for the 3 issue shares adds to the book value along with with the book value of the 7 existing shares, the issue price seems very reasonable and the reaction of the market seems excessive.
And at current prices, the stock seems to be selling below book value even assuming that the Rs 96 doesn't add to the book value.
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