35076847 nhpc ltd ipo note

NHPC Limited - IPO Note ACMIIL NHPC Limited Analyst Radhika Podar [email protected] Tel: (022) 2858 3410 Issue Details Face Value INR. 10 Price INR 30-INR36 per share Issue Size 1.68 bn equity shares Is su e Amount INR50.32bn - INR60.39bn Minimum Lot 175 shares Minimum Amoun t INR. 5250 – INR. 63 00 Issue Opens August 07, 2009 Issue Closes August 12, 2009 Other Details Lead Managers ENAM Securities Pvt. Ltd,Kotak Mahindra Capital company Ltd, SBI Capital Markets Ltd. Reg is tr ar s Ka r vy Co mp ut er s ha re Pvt Lt d. Listing BSE & NSE Financial Highlights (INR mn) Particulars FY07 FY08 FY09 T otal Income 25799.4 33216.3 40515.2 % Growth 9.65 28.75 21.97 Operating pr ofit 20199.6 25042.5 25891.1 % To income 78.29 75.39 63.90 Net Profit 10490.9 12070.4 12441.5 % T o income 40.66 36.34 30.71 Diluted EPS (Rs) 0.85 0.98 1.01 Aug 07, 2009 Public issue of 1.68 bn shares with a face value of INR10 at a pr ice band of INR30- INR 36, aggregating to INR50.32bn - INR60.39bn. The issue comprises an offer for sale of 0.56bn shares and fresh issue of 1.1bn shares. Background NHPC is a hydroelectric power generating company, which is dedicated to the planning, development, and implementation of an integrated and efcient network of hydroelectric projects in India. NHPC is involved in all aspects of hydroelectric projects - from conceptualizing to commissioning. Objects Of The Issue To part nance the construction and development costs of projects such as Subansiri Lower, Uri – II, Chamera - III, Parbati – III, Nimoo Bazgo, Chutak, and Teesta Low Dam – IV. General corporate purposes Valuation We value NHPC on a P/BV basis relative to peers like JP Hydro in the hydel space and NTPC and Tata Power , CESC and KSK Energy. While there are no comparable peers, we believe hydel companies should be accorded discounting lower than its thermal peers owing to the higher risks of execution and long gestation periods. We believe NHPC’s nearest comparable peer is NTPC owing to a common lineage and large scale. Bulk of NHPC’s projects are being commissioned in FY11 and FY13. We have estimated the addition to gross block, funding and debt repayment as per norms for FY12 when the rst tranche of projects will be eligible for full RoE. We have also considered that the projects will be commissioned as scheduled. The upper price band of INR36 discounts NHPC’s FY12E book value by 1.62x and the lower price band discounts FY12E book value by 1.38x. The upper P/BV is at a 31% discount to NTPC while the lower P/BV is at a 41% discount to NTPC. We believe that the higher price band does not adequately factor in the risks. Thus, we recommend “SUBSCRIBE” at the lower price band of INR30. 1. 2.

35076847 nhpc ltd ipo note

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