Processing .....please wait.. 
The article has been forwarded.... 
Adani Power opens IPO with a sale price of 
90-100
By siliconindia
|
Tuesday, 28 July 2009, 19:13 IST |
1 Comments
90-100 and the Company plans to raise 3000 crores at the upper end. Analysts suggest that the valuations are a bit demanding at this range. The offer to sell shares closes on 31 July.
The offer to sell shares by Adani is the biggest initial public offering (IPO) after Reliance Power raised 11,700 crores in February 2008. Analysts feel that the sale price by the Company is a little steep and this may affect its performance in the market.
Motilal Oswal Securities arrived at a pre-money valuation range of 68-98 per share. The brokerage believes the IPO valuation is demanding and factors in perfect execution. According to Mint, the pre-money valuation does not take the cash to be raised in the IPO into account and the brokerage arrived at this value by determining the future cash flows of the company.
The key issues that concern analysts include viability of coal supply agreements, total dependence on Chinese equipment vendors and conflicts of interest with other group companies. For instance, Sharekhan notes: "There have been significant reports about the quality and poor performance of the Chinese equipment in the country. If the equipment does not operate as required, the financials could be significantly affected."
Noble GP estimates fair value at 105 a share, based on the average value assigned by investors to every megawatt (MW) of power capacity in listed firms. Adani's share sale will be the first of such issues from the power sector. State-owned National Hydro Power Corporation (NHPC) and Indiabulls Power are planning to sell shares to the public for the first time later this year.
According to the Central Electricity Authority, peak-hour power shortage in India will grow to 12.6 percent by March 2010. Adani plans to utilize the money raised from the equity sale to finance power projects in Western India. It currently produces 330 MW and is planning to increase the capacity to 6,600 MW by 2012.
