FPO-Power Grid Corp

Source :ET:9th Nov 2010


With the huge success of Coal India divestment through the biggest IPO in India fresh in the minds of the investors, the government launched the divestment of Power Grid Corp on November 9. The bidding will close on November 12.

In the Power Grid follow on offering, worth approximately Rs 8,000 crore, the government and the company has split the funds in equal proportion since half of the total 84.2 crore shares are new shares being issued by the company while the government is offloading an equal number of shares.

The offering is at a price band of Rs 85-90 per share. 

For retail investors and Power Grid's own employees, there is a discount of 5 per cent to the final price on offer and one could bid in a lot size of 65 shares.


Motilal Oswal has maintained ‘Buy’ recommendation on Power Grid Corporation (PGCIL) after the state-owned company has entered the capital market to raise around Rs 7,600 crore via follow-on public offer. The FPO price band is fixed at Rs 85-90 per share. 

The brokerage has a target of Rs 123 on the stock, an upside of around 37% from the cap price. 

“We expect PGCIL's regulated asset base (RAB) to increase from Rs 113 billion as at March 2010 to Rs 173 billion by FY12 (up 50%+), with projects of ~Rs 200 billion being commissioned and capitalized in this period. 

We expect the company to report a net profit of Rs 26.6 billion in FY11 (up 15%) and Rs 33.3 billion in FY12 (up 25%). Given the delays in terms of asset capitalization and post factoring in possible equity dilution, we marginally cut our EPS estimates by 4% for FY11 to Rs 5.7 and by 6.8% for FY 12 to Rs 7.2. We maintain Buy with a target price of Rs 123,” the report said.