IBIPL is a demerged entity from Indiabulls Realty (IBREL). IBIPL now happens to be the promoter of Indiabulls Power (IBPOW).
IBIPL was demerged from IBREL to unlock the value of its holdings in IBPOW., It issued 2.95 shares of IBIPL for every 1 shares of IBREL. The capital of IBIPL is 127 crores shares. also IBIPL holds 118 crore shares in IBPOW.
Effectively each IBIPL share holder holds 1 shares of IBPOW. The price of IBIPL is Rs 5/- and Price of IBPOW is Rs 13/-. effectively If i buy shares of IBIPL , I will get shares of IBPOW at Rs 5/-. As Promoters have demerged the holdings in IBPOW in different company to create shareholder value, it can only be done if IBIPL goes for merger with IBPOW, where each shareholder would get 1 share of IBPOW. (This is synonym to demerger done by Reliance Industires for Reliance capital, RNRL and Reliance Energy)
The shares of IBIPL is availiable at price of a holding company (Discounting of almost 50%), but there is high probability of merger of IBIPL with IBPOW, leading to jump in valuation.
Also IBPOW is availiable cheap compared to its historical price and issue price of Rs 35/-, where LNM and Falloran have stakes.
There are pitfalls in the trade, fiirst is the merger may not take place in near future leading to long holding period. Also Power sector in India is struggling and Promoters do not have experience in executing power projects.
Also there are huge buyers on the counter leading to non - availibility of shares, there are huge volumes on the counter leading us to believe that early buyers in the morning have high probability of trades getting executed.
It seems to be a good trading bet, with stock available at value of holding company and value unlocking may take place in future.
This is not the recommendation to anybody whatsoever to buy or sell this share, but it is my thought process and views on this topic.
I welcome your critical comments and suggestions.