'RPL: A price band of Rs 75-90 likely'

Raj Gandhi of Angel Stock Broking says since there were a number of people who did not get the right allotment of Reliance Petroleum, there is still a lot of pending demand buying seen. But he suggests to wait for this pending demand buying to get over and then buy the stock at around Rs 75-80.

In the next one week, Gandhi sees RPL trading at a price band of Rs 75-90.

Excerpts from CNBC - TV18's exclusive interview with Raj Gandhi:

At Rs 87, would you recommend your clients to go and buy Reliance Petroleum?

One saw a huge over-subscription for a big issue like this, so there is still a lot of pending demand there. On that side, there is a lot of buying frenzy happening for people who did not get the allotment right. There are not many stocks within the oil sector and it being a big sector, the allocation has to be high for a portfolio.

But there are not many stocks available with most of the PSUs under the subsidy burden. There are few companies in the Reliance Group, wherein one can invest, so we are seeing a lot of investment from that side.

From a pure retail investor perspective, we will suggest to wait for this demand buying to get over and they can buy it at around Rs 75-80 for the big upside. This is because from this level, it would no longer be a multi-bagger that it was.

Investors can see 15-20 per cent compounding from these levels and we see it getting $6 premium over Singapore margins. On an estimated $10 margin, we see an EPS of Rs 12 in 2010 for RPL. I would recommend retail investors to wait for some time for this pending demand buying to go down and they can enter at around Rs 75. For investors who already have the stock, I would recommend to hold on to it.

In the next one-week or so, what kind of a price band do you see Reliance Petro trading in at?

I see a price band of around Rs 75-Rs 90.

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