The HDFC warrant is currently ruling at Rs 85 with that the effective cost works out to Rs 685. Even if we take a dividend loss of about Rs 10 expecting that 500% dividend will be get declared, after adding that the effective cost works out to about Rs 695."
"We are paying a premium of about Rs 25 and in lieu of that one is having funding facility . Alternatively, if I have bought HDFC share and would have kept it for one year, I would have invested Rs 685 and that much amount would have blocked. The effective interest cost to me works out at about 8% p.a. which looks very interesting."
"I am expecting HDFC to move to Rs 770-775 by August 2012.
"We are paying a premium of about Rs 25 and in lieu of that one is having funding facility . Alternatively, if I have bought HDFC share and would have kept it for one year, I would have invested Rs 685 and that much amount would have blocked. The effective interest cost to me works out at about 8% p.a. which looks very interesting."
"I am expecting HDFC to move to Rs 770-775 by August 2012.
Taking the differentials, at that point of time warrant holders entitled to subscribe one share at Rs 600. If share rules at that point of time is at Rs 740 it will have a difference of about Rs 140 per warrant which is now ruling at Rs 70. So this effectively can give 100% return on the amount invested now."
"I don't think that kind of return is expected from HDFC. If I buy a share at Rs 665-670 that will rise to about Rs 770 and give me a return of about 16-17-18%. But by opting for warrants I can have a return of 100%. "The only problem for the small investors is that these warrants are available in the demat mode but one has to buy a minimum lot of 1,850. But the share vis-à-vis the warrant cost ratio works out to 6:1.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
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