Monday, October 12, 2009

Indiabulls Power Ltd. (IPL) - Analysis

Indiabulls power ltd. (IPL) has come up with its (IPO) initial public offering to fund its major projects in the field of power generation The company has five thermal power projects under development, which will have a combined installed capacity of 6,615 MW. Amongst them are, the construction and development of the 1,320 MW Amravati Power Project Phase – I (Rs 775 crore from the issue) and 1,335 MW Nashik Power Project (Rs 660 crore from the issue). Apart from these IPL has various other projects in pipeline such as Bhaiyathan Power Project, Amravati Phase II Power Project, Chhattisgarh Power Project and some of them in advanced stages.

The IPO of 390, 700,000 equity shares will open for subscription on 12th October and ends on 15th October.
 
For the year ended March 31, 2009, it has reported profit of Rs 82.96 crore on total income of Rs 141.34 crore on the consolidated basis.
 
"At the higher end of the band, IPL is expected to be valued at 2.1xFY12E to post-issue book value. We value IPL's 5295MW on DCFE basis at Rs 37 and have given a 25% premium to capture the value of future projects, to arrive at Rs 46 per share value. We would recommend 'Subscribe' for listing gains."
                                                                                                             Prabhudas Lilladher
 
Going further, Crisil has rated IPL(Indiabulls Power Ltd) 3/5 for its IPO based on the fundamentals which certainly indicates a neutral valuations. Given the brand name and the management abilities it would be worth buying this stock or applying for IPO as it looks fairly priced. But given the current market volatility where large IPO's Like NHPC and OIL INDIA have failed to achieve significant returns since listing.

Company
Issue price
High
CMP
Oil India                          
1050
1210
1195
NHPC
36
42
33.05
Adani power
100
110
101.25

*         CMP as on 9-Oct-2009
 
Therefore recent IPO's from energy and power sector has not been too attractive in terms of returns.
 
Considering this situation we would suggest the investors to go for Indiabulls Power Ltd. IPO
With medium term to long term view as most of the projects are in advanced stages and the valuations look very attractive considering its 2012-2013 earnings
 
Below are the fundamentals of IPL.

Price Band
Rs40 to 45
Crisil IPO Grading
3/5
Opening Date
October 12, 2009
Closing Date
October 15, 2009
BRLM
Morgan Stanley
Issue Size (Rs bn) excluding GSO
Rs 13.6-15.3
Pre-issue equity
1659.00
Fresh Issue
339.8
Employee Reservation
0.00
QIBs
203.88
Retail
101.94
Non-institutional
33.98
Post-issue equity
1998.8
Green-shoe option (GSO)
upto 50.9
Post-issue equity with GSO
2049.7

Share Holdings

Share Holdings
Pre issue (%)
Post Issue (%)
Promoter group
71.4
57.8
Foreign Investors
28.6
23.1
Public
-
16.6
GSO
-
2.5

Source: RHP
 
Key Financial

Key Financial
FY 09
FY 10E
FY 11E
FY 12E
EBITDA (Rs m)
(195)
(210)
(264)
(354)
PAT (Rs m)
831
715
539
(393)
EPS (Rs)
1.0
0.4
0.3
(0.2)
Growth (%)
346.9
(64.3)
(24.6)
-

Source: Company Data; PL Research
 
Profitability & Valuation

Profitability & Valuation
FY 09
FY 10E
FY 11E
FY 12E
RoE (%)
3.8
2.1
1.2
(0.9)
RoCE (%)
4.1
2.2
1.6
1.2
P/ BV (x)
1.6
2.0
2.0
2.1
PE (x)
44.9
125.8
166.7
-

 

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