adani power
Adani Power Ltd. swung between gains and losses and closed at 100.10 rupees, compared with the 100 rupees at which the stock was sold in the initial public offering last month. The shares earlier climbed 10 percent and declined as much as 1.7 percent.
Utilities including Tata Power Co. and Indiabulls Power Ltd. plan to tap appetite for power shares after India’s benchmark Sensitive Index headed for its best year in six, gaining 56 percent. The pace of electricity capacity expansion in India, which Power Minister Sushil Kumar Shinde said has been slowed by delays in equipment supply, has some investors worried.
“Adani has very less capacity on the ground and there is always the risk to planned future additions,” said Girish Solanki, a Mumbai-based analyst with Angel Broking Ltd. “We think a fair value for the stock is 82 rupees.”
The utility, which plans to build power plants with a combined capacity of 6,600 megawatts by 2012, may not raise more funds for at least two years, Ameet Desai, a director at Adani Power, told reporters in Mumbai today.
“We have enough cash and will finance all projects from internal accruals,” he said. Adani Power has secured loans of 226.8 billion rupees for the projects, Desai said June 26.
Anchor Investors
Adani Power offered 301.6 million shares at 90 rupees to 100 rupees each, including 52 million shares to so-called anchor investors before the public sale. The utility will use the funds to partly finance power projects in the western state of Gujarat and neighboring Maharashtra, according to its share sale document.
The power producer started operating its first unit at Mundra in Gujarat with a generating capacity of 330 megawatts about three weeks ago, Devendra Amin, spokesman for the Adani Group, said by telephone today.
Mumbai-based Indiabulls said July 15 it plans an IPO that will be managed by Morgan Stanley India Co. Other companies waiting on the sidelines to raise funds include New Delhi-based Jindal Steel & Power Ltd., which has said it may sell as much as 12 percent of its power unit this fiscal year, and JSW Steel Ltd.
“Private sector power companies will go a long way in improving India’s capacity addition execution targets and there is big growth potential,” said Mahesh Patil, who helps manage $2 billion in equities at Birla Sun Life Mutual Fund in Mumbai. Patil said 100 rupees a share is a fair value for the Adani Power stock.
NHPC Stake Sale
NHPC Ltd., India’s biggest hydroelectric power generator, received more than 1.19 trillion rupees of bids, or 23.7 times the stock on offer, in its initial share sale that ended Aug. 12.
State-owned NHPC planned to sell as much as 60 billion rupees of shares, including a 20 billion rupee stake of the government, in the offer that started Aug. 7.
NHPC offered shares at 30 rupees to 36 rupees apiece and will use part of the funds to build seven hydroelectric projects with a combined capacity of 3,240 megawatts, according to the share sale documents.
Reliance Power Ltd. raised $3 billion in January 2008 in India’s biggest IPO.
Adani Power’s share sale was managed by DSP Merrill Lynch Ltd., Enam Securities Pvt., IDFC-SSKI Ltd., JM Financial Consultants Pvt., Kotak Mahindra Capital Co., Morgan Stanley and ICICI Securities Ltd.
India’s utilities aim to add 78,700 megawatts of capacity in the five years to 2012.
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