MUMBAI: Nirmal Bang has advised investors to ‘Subscribe’ to follow-on public offer of Power Grid Corporation.
“Power Grid Corporation is India’s principal power transmission company with robust transmission infrastructure across the country. We believe, huge capital expenditure over next few years, will give growth in revenues. In addition to this, Consultancy income, Telecom business, short term open access revenue will supplement the growth.
On H1FY11 annualised earnings, the stock is offered at the PE of 15.38x and 14.52x (diluted equity) on upper band & lower band respectively, and on P/BV basis the stock is offered at 1.98x & 1.87x. We believe both on PE basis & P/BV the stock is offered at an attractive price. We recommend “Subscribe” to the FPO,” the report said.
The follow on public offer comprises both fresh issue by the company and offer for sale by the government of India. The proceeds from the fresh issue would be utilised towards capital requirements of certain identified transmission projects. The object of the offer for sale is to carry divestment by the Government of India.
The FPO price band is fixed at Rs 85-90 per share. The issue closes Friday.
SBI Capital Markets, Goldman Sachs (India), ICICI Securities and J.P. Morgan India are the book running lead managers to the issue.
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