Buzzing Mid-cap stocks: RCom and Godrej Properties

Reliance Communications (RCom) had signed binding agreements with Aircel Ltd. (Aircel) in September 2016 for the merger of RCom's mobile business with Aircel. However, legal and regulatory uncertainties and various interventions by vested interests have allegedly caused inordinate delays in receipt of relevant approvals for the proposed transaction. This has led the merger agreement to lapse and this was approved by the board of directors in the meeting held on October 1, 2017. On Monday, the company named four of its senior executives to its board.  

RCom was planning to reduce its Rs 45,000 crore debt with the help of its alliance with Aircel. While the merger included transfer of Rs 14,000 crore of RCom's debt to the new entity, the tower deal would have fetched Rs 11,000 crore, collectively knocking off Rs 25,000 crore of debt. But now that the merger is called-off, RCom will continue to bear the burden of its huge debt. 

On Friday, the stock closed at Rs 19.20. Today it opened at Rs 18.70 and touched intra-day low of Rs 16.75. Thus, today the stock plunged by 12.7 per cent. 

On the other hand, another mid-cap company named Godrej Properties entered into a joint venture agreement with Royale Builders & Developers to develop a 13-acre (i.e. 1.34 million sq.ft.) group  housing project in North Bengaluru. This is company's 15th project in Bengaluru.

It has also announced a new project by entering into a partnership to develop a residential project of 4.5 million sq.ft. saleable area in Mamurdi, West Pune. This location is close to prime commercial centres such as Wakad, Hinjewadi, and the automobile hub at Pimpri-Chinchwad. Godrej Properties has many projects in line that are spread across 142.79 million sq.ft. in 12 cities. 

The stock today opened at Rs 622 and made an intra-day high of Rs 627.70, surging by 1.4 per cent from its previous closing price of Rs 619.10 in the morning session.