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Subscribe to Adani Power IPO: Experts

Published on Tue, Jul 28, 2009 at 12:23 | Source : Moneycontrol.com

Updated at Thu, Jul 30, 2009 at 10:33

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Nifty

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The initial public offering (IPO) of Adani Power, a power project development company, promoted by Adani Enterprises has opened for subscription with 301,652,031 equity shares of Rs 10 each for cash at a price to be decided through a 100% book-building process. The price band has been fixed between Rs 90 and Rs 100 per equity share.

Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Experts said apply to the issue. ( * - brokerages' views)

Experts/Company	Poll Result	Experts view
Manish Bhatt (Prabhudas Lilladher)	Apply	Subscribe to Adani Power IPO for 9-15% listing gains. High networth individuals' portion will get subscribed around 10 times and retail around 3 times.
SP Tulsian (Investment Advisor)	Apply	The company has Power Purchase Agreement (PPA) in place for 4,744 MW, which is about 72% of the capacity under implementation, of 6,600 MW. Balance will be sold on spot basis. Due to assured returns available to power projects and with gearing of about 4:1, the company will be having advantage to post a return of close to 35% on shareholders funds. Post issue equity of the company will rise to Rs 2,180 which would translate into market capitalization of close to Rs 22,000 crore, considering issue price of Rs 100 and shall have net worth of close to Rs 5,700 crore. This would result in a PBV of close to 3.85. The closest contenders for Adani, based on the size of the project are Sterlite Energy, GMR Energy, Jindal Steel Power, JSW Energy, J. P. Power, and Reliance Power. And we compare these with Adani, then, it can be seen that the execution capability will be the key for success of all these companies. This has been established by the promoters of the company, after implementing 32,000 acres sea-port project being Mundra Port. Also, strength of the promoters in coal procurement will be to the advantage of the company. Considering all this, issue looks good and recommended even at the upper band of Rs 100, as power sector holds good long term potentials to reward the shareholders.
KRChoksey*	Apply	'Subscribe' to the company's IPO. Based on its calculation, the company's fair value comes at Rs 104 per share & believes that the downside risk is negligible and one can look into the issue for listing gains.
Nirmal Bang*	Apply	Reliance Power is the best comparable company as both the companies are implementing large power plants and do not have any existing operational revenue generation. It recommends investors to 'Subscribe' to the company.
Reliance Money*	Apply	The company gets a BV of Rs.33.5-36.3 at the price band of Rs.90-100. The stock quotes at P/BV of 2.7x and 2.8x post dilution. Looking at the long term growth prospects, it believes Adani Power Ltd is a good opportunity for investors and recommend 'Subscribe' with a long-term prospective.