The stock of Anil Ambani’s Reliance Natural Resources Ltd (RNRL) has been one of the most volatile this year.
The share witnessed wild swings over the past month as the company's fate hung in balance due to the gas dispute with Reliance Industries Ltd (RIL). RNRL has a history of high volatility. It rose from a low of Rs 20 in 2006 to a lifetime high of Rs 203 in November 2007 on the Bombay Stock Exchange (BSE) and fell sharply thereafter.
The stock crashed over 40 per cent in a week last month after the Supreme Court verdict in a gas dispute case went against the company. But, it has seen a sudden bounce of over 60 per cent in the past three weeks. After falling from Rs 72 to Rs 42.50 on BSE in May, it was last traded at Rs 66.85 on BSE today.
While the fall was a result of the court verdict, which broke its business model, market players said the rise was due to speculation that the company would be acquired by RIL. RNRL was vested with the gas-based energy undertaking of RIL, defined under the scheme of arrangement during the Ambani family settlement of 2005. Primarily, RNRL was a vehicle which would acquire gas from RIL at a cheaper price and supply it to the Anil Dhirubhai Ambani Group's power projects. The deal was part of the family settlement to compensate Anil Ambani for certain assets which went in favour of Mukesh Ambani.
However, after the court verdict, this didn’t make sense, as RNRL was estimated to suffer an estimated loss of over Rs 3,000 crore annually. Market players believe that in any final settlement, Mukesh will not buy out RNRL to compensate Anil Ambani.
“There was some money to be paid to Anil Ambani as per the settlement. If RNRL is acquired, that money will be paid to Anil. The share is rising as Anil may get exit premium from the company,” said a veteran Reliance group watcher and independent equity advisor, S P Tulsian.
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Earlier, in 2007 when settlement talks between the brothers surfaced, the RNRL share price touched a lifetime high of Rs 203 on November 6, when it had no clear business. The open interest in the derivatives segment of the counter was over 100 million shares.
The rise was baffling, as it was trading at around Rs 20 on BSE in 2006. On November 7, 2007, the stock suddenly fell to Rs 135 on the BSE as top punters went short on the counter.