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India's principal power transmission company and Mini-Ratna Category- I public sector undertaking, Power Grid Corporation of India is entering the capital markets with an initial public offering (IPO) of 573,932,895 equity shares of Rs 10 each for cash at a price to be decided through a 100% book building process. The company will raise Rs 2984 crore in higher end of the band.

Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Experts said apply.

Experts/Company	Poll Result	Experts view
R S Iyer (KR Choksey)	Apply	Power Grid is an excellent issue. It falls in the category of Golden Scrip. Pricing is reasonable. People should subscribe. The stock is expected to list at around Rs 75 as per present market situation. If one gets below Rs 70, then accumulate it for long term.
Manish Bhatt (Prabhudas Lilladher)	Apply	Power Grid Corp is a big transmission company in India. Power shortage to be remained in India for long time, so this will be major beneficial from that. Its issue looks to be good, at reasonable price band.
SP Tulsian (Investment Advisor)	Apply	Power Grid Corporation is country's principal electric power transmission company, owning country's inter-state and inter-regional electric power transmission system.   The company is implementing certain identified transmission projects with 13,022 circuit km. with total estimated cost of Rs 12,708 crore which is being financed by debt equity of 70 : 30 in accordance with CERC norms. An amount of Rs 5,863 crore has already been spent upto 31-03-07.   The company is likely to post an EPS of Rs.5 for FY 08, and even if the book is discovered at the upper band of Rs.52 per share, PE ratio works out close to 10. The power sector has tremendous untapped potential and transmission companies would largely get benefited from capacity addition. The company being one of the largest players, controlling almost 50% market, has bright future ahead. Hence, investment is advised at the upper band of Rs 52.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The issue comprises a fresh issue of up to 382,621,930 equity shares by the company and an offer for sale of up to 191,310,965 equity shares by The President Of India acting through The Ministry Of Power, Government of India.

The issue comprises a net issue to the public of up to 559,954,895 equity shares and a reservation of up to 13,978,000 equity shares for subscription by employees of the company. The issue shall constitute approximately 13.64% of the fully diluted post- issue capital of the company. After the issue, the Government of India, through the Ministry of Power will continue to hold 86.36% of the diluted post-Issue paid-up equity capital of the company.

The price band for the issue, which opens for subscription on September 10, 2007, and closes on September 13, 2007, has been fixed between Rs 44 per equity share and Rs 52 per equity share.

Power Grid Corporation of India owns and operates most of India's interstate and inter-regional electric power transmission system. In that capacity, as at June 30, 2007 the company owned and operated 61,875 circuit kilometres of electrical transmission lines and 106 electrical substations. In Fiscal 2007, the company transmitted approximately 298 billion units of electricity, representing approximately 45% of all the power generated in India (Source: CEA Website, March 2007).

The net proceeds of the fresh issue shall be utilized for 15 identified transmission projects of the company. The estimated cost of these projects as on July 31, 2007 is approximately Rs 127,075 million. These projects are proposed to be funded with a debt-equity ratio of 70:30 in accordance with CERC norms. The equity component of the identified projects is to be funded by a combination of internal accruals of the company and the proceeds of the fresh issue.

The equity shares are proposed to be listed on the BSE and NSE. The book running lead managers to the Issue are: Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited and Enam Securities Private Limited.