NHPC IPO: Price Band, Grade and Date
The price band of NHPC IPO is between Rs. 30 and Rs. 36.
ICRA has rated the NHPC IPO 3 out 5.
NHPC IPO opens at August 7th 2009 and will close on August 12th 2009.
NHPC: Business Overview
NHPC is a hydroelectric power company which has got 13 power stations, and an installed capacity of 5,175 MW. NHPC is predominantly present in the North and North Eastern part of India, and has power stations in the following states:
- Jammu & Kashmir
- Himachal Pradesh
- Uttarakhand
- Arunachal Pradesh
- Assam
- Manipur
- Sikkim
- West Bengal
The real story behind the NHPC IPO is one about expansion and growth. NHPC is currently engaged in the construction of 11 hydroelectric projects, which will increase its capacity by 4,622 MW. Further, 8 projects with an anticipated capacity of 5,751 MW are awaiting sanctions from the CCEA. Survey and Investigation works are being carried out to prepare project proposal reports for nine additional projects for 7,255 MW.
Here is a schedule of commissioning of the projects:
| Name | Capacity MW | Commissioning Date |
| Sewa II | 120 | June 2009 |
| Teesta Low Dam | 132 | December 2009 |
| Uri II | 240 | August 2010 |
| Chamera III | 231 | August 2010 |
| Teesta Low Dam IV | 160 | August 2010 |
| Nimoo Bazgo | 45 | August 2010 |
| Parbati III | 520 | November 2010 |
| Parbati II | 800 | December 2010 |
| Chutak | 44 | February 2011 |
| Subansiri Lower | 2,000 | January 2012 |
| Kishanganga | 330 | July 2014 |
| Total | 4,622 |
NHPC was designated as a Mini Ratna Category-I entity by the government in April 2008. The Government rated its performance “Excellent” from Fiscal 1994 to 2006 and “Very Good” in Fiscal 2007.
Fitch has rated the long term foreign currency debt of NHPC at BBB-, and domestic short term and long term borrowing at AAA with stable outlook and F1+ respectively.
NHPC derives its revenues from sales to State Electricity Boards (SEBs) and has long term power purchase agreements to sell its power to SEBs and their successor units.
NHPC: Financials
NHPC had revenues of Rs.2,957.33 crores in fiscal 2008 and 2,132.28 crores in the fiscal before that. The profit after tax for those two years was Rs.1,085.16 crores and Rs.945.97 crores. The EPS for 31st March 2008 was Rs.0.97 and for 2007, was Rs.0.87.
At the higher band of Rs.36, the P/E multiple translates to 37.11 on 2008 earnings. Just for reference, the EPS of NTPC for fiscal 2009 was Rs. 9.81 and at current price of Rs.215, the P/E Multiple comes out at 21.9. (I couldn’t find fiscal 2009 numbers for NHPC).
At the upper band of Rs.36, this issue translates into Rs.6,000 crores. NHPC will issue 10% fresh equity and 5% disinvestment of the government stake. That means that government will pocket Rs.2,000 crores out of this and Rs.4,000 crores will remain with the company.
Economic Times reported that the lead managers proposed a price band between Rs. 25 to Rs.30, so the price that has been announced is 20% higher than what the lead managers advised.
NHPC: Risk Factors
NHPC is in the business of developing power projects. This is a business that has long gestation periods and needs a lot of capital investment before they can turn in a positive cash flow.
NHPC IPO is coming out to raise funds for the company to carry out expansion. The expansion plans of NHPC are ambitious and require a lot of capital. The estimate for this is Rs. 4,385 crore, and is expected to be raised through the IPO, internal accruals and debt. The scale of the expansion exposes it to risks related to raising funds.
NHPC has total borrowings of Rs.12,885.49 crores as of March 31st 2008 and debt – servicing can become a risk for the company.
NHPC sells its power to State Electricity Boards. The financial condition of a lot of State Electricity Boards is not good, and this poses a risk of payment default. The positive here is that NHPC has the Government of India to fall back upon; in case the state defaults.
As you can see from the plethora of power IPOs like the Adani Power IPO and Indiabulls Power IPO; the power sector in India is attracting large corporate houses and competition is intensifying in the sector
NHPC sells its power on tariff rates decided by the CERC. IF the CERC changes the way it calculates tariff, it may negatively impact the cash flows of NHPC.
This is a rather peculiar risk in that NHPC derives most of its revenues from long term agreements of about 5 year or so. This means that there isn’t much flexibility during the period of the contract to NHPC to grow revenues. And it adds pressure on them to manage costs in order to remain profitable. It also reduces their chances of entering into new contracts, if the energy prices rise and restrict their ability to take advantage of the rising energy costs.
The big positive about NHPC IPO are that it is a power IPO of a company that is actually generating power and not just planning to generate power. The negative is that the pricing is not as low as it could have been.
Photo Credit: Vattenfall
This is just a summary of the NHPC IPO from its draft prospectus filed with SEBI. This is not a buy or sell recommendation on this IPO.
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NHPC is a Premier Hydro Power PSU of Govt of India.Presently NHPC is generating 5175 MW and approx 5000 MW Capacity will be added by year 2012.Hydro Project have a very long life ,Ist Hydro Power was installed by the British in Darjeeling more than 100 yrs ago and it is still in working. Hydro Power Generation is free from inflation and generating cost decreases in case of Hydro in the otherhand generating cost increases in case of Thermal or Nuclear Power.As per grid requirements at least 40 % power should be Hydro Power to meet out peak power demands.NHPC has completed toughest project in India and it have stong fundamentals of surveying,design,construction and operation & maintenance.Being the Hydro Power profit of NHPC will always be in upward trend which will not be possible in other sectors.
pls send me the date of NHPC share allotment date as soon as possible………..
I don’t think the allotment details are out yet. Yesterday Karvy had a link to the allotment details, but it was not working. Today I see that it has been removed altogether.
When the allotment status does come out, you will find it in this link:
http://www.karvy.com/ipoStatus/
what is the expected high cost for nhpc share
How much time will it take to refund money, in case no shares or partial allocation is done.
How can a foreign national invest in the IPO of NHPC?
Only if a foreign national is a sub-account of a registered FII.
price brand is high. the near term( upto end of 2010 ) capacity addition is limited to 700 MW only. out of total issue size of 6000 Cr. at higher price end GOI gets 2,012.8 crores.so, the net allocation is 4000 crore only. higher debt is also serious concern.Also the completion time of new projects can be more than estimated , which has negative impact if debt component is more.
as far as near term is concerned P/BV should not be taken as key for comparison with others. the majority of capacity addition takes place in 2012. P/E ratio is 37 (too high) . it may not result in good listing returns.if one has 3 years + investing period then they can go for it.
how ever the best option would be invest less amount in ipo (better to stay away from it ) or buy in secondary market when the market undergoes correction any where after january 2010.the above are my personal views.
i am having a querry for the allotment of nhpc ipo that minimum lot for applyin for bid is 175 unit.so if iam applying for just 175 units then is there chances for allotment.if not then what will be good option for applying.
i do not have a demat account …can i buy nhpc ipo and then later open a demat account.
no its a particular need mandatory for applying to any ipo that u must posses a demat account number that you have to mention in the application form also.so better try to open a demat account in any of the broking platforms like karvy,reliancemoney,sbi demat etc.
can anyone tell me when NHPC and ADANI power are going to be listed on NSE n BSE
On the very 1st day NHPC IPO was subscribed over 3 times…. so can anyone tell me what is the procedure to allocate IPOs?? if im applying for min number of units @ 36 rupees, then what are the chances of getting them??
IPOs are broken into categories allocated to Institutional, Non Institutional , Retail and Employees.
The 3 times over-subscription number is a sum total of all categories. You must have applied under the Retail category, which is subscribed at 0.09 times.
The over subscription is driven by institutional investors who have subscribed 6 times their quota (as of Aug 09). So, you still have chances of getting something allocated.
If the Retail category gets subscribed by more than 1, then your allocation will get lowered.
By mistake I applied for 4200 shares of NHPC in the category of Non-Institutional investor. Please guide me about it as i can not understand have i done wrong or right. What can be the implications of investing through Non-Institutional Category.
You have applied for an amount of over Rs. 1 lakh, so you had to do it through the NI route. Retail can only apply for less than 1 lakh.
The benefit of applying through NI route is that you can apply for more and increase your chances of allocation.
The drawback is that NI category has a quota of 9.75% of the total IPO, whereas the Retail category has a quota of 29.25% of the total IPO. So that means the chances of over-subscription and lower percentage of allotment increases in the NI category.
Wii my application get rejected or acceptedas i have applied through NI catogaory
I hav a demat A/c, so how do i apply for the NHPC ipo. do i need to download form n sumbit it… or what is da process…
You open a Demat Account with any bank and apply online between 7 to 12 Aug 09
i Want to buy NHPC IPO SO How can i buy this ipo and whice kind of formalities i have to done tell me.ok
you open a Demat account with a bank and apply online
IF POSSIBLE CAN CALL ME AS WELL 09999923874
u can ask me in detail if u wish, my number is 09336261910
CAN SOMEONE TELL ME HOW CAN I PURCHASE NHPC IPO ??
@ Rohit, do you have demat account, if no open one in a bank of your choise and then apply online or physical application submitting.
khalid
NHPC Limited, a Govt. of India’s Enterprise and also a Mini Rattan Corporation awarded by Govt. of India, working in remote areas against the nature in advers conditons and trying to completing its project well in time and at present achieving its targets well before schedule is appriciated. I am having full faith and wishing this company all success in future.