NHPC (Mini Ratna) IPO brief

NHPC IPO -
The meeting was held to fix the NHPC IPO price band. Deputy Chairman of the Planning Commission Montek Singh Ahluwalia as well as the Finance Minister were present at the meet, which took place at around 3’oclock today at the Finance Ministry. The Minister said that it is definitely more than what they had expected.

Earlier a conservative estimate was made of between Rs 20-25 per share and the aggressive estimate was between Rs 30-36 per share for that IPO.

SK Garg, CMD, NHPC said, IPO price band set at Rs 30-36 per share. “The price band is based on 2 times price-to-book ratio," he said. The IPO issue will open on August 7 and close on August 12," Garg added.

The overall mandate from the government is 24%, but they have asked the company to go for in the first tranche with only 10% of fresh equity and plus 5% of disinvestment of the government’s own equity. The company’s current capacity was at 5175 MW and plans to increase to 9600 MW by 2013.

So in all NHPC is coming to the market in 15% (around 196 Cr equity shares), if we take the upper band of Rs 36, then it translates into Rs 6,000 crore, so out of Rs 6,000 crore 2/3rd will be flowing to NHPC, around Rs 4,000 crore and Rs 2,000 crore will go to GOI. This Rs. 4000 Cr will be spent on projects which are under construction right now, seven projects are lined up which will be funded out of this equity inflow to the company and 1/3rd will go to the government of India.

Current Capacity & Future Plans -
NHPC has lined up almost 11 projects. By the end of 2013, NHPC’s capacity would be touching around 9,500 MW. So a lot of investment will be coming & giving yield on that ROE also. So there will be an impressive book value as against the current one around 12 plus.

Right now NHPC has capacity of around 5,175 MW with 13 power stations. One more project of 120 MW will be commissioned by the end of the year in J&K. Apart from that, another six projects we will be delivering in 2010-11 and the total capacity will be around 2,200 MW, rest one project we are likely to give in 2011-12 and one would be coming in 2013 December.

So in all by 2013 or so, the total capacity of NHPC is nearing 10,000 MW.

2010 is the base year where it is going to deliver almost six projects to the nation and huge capacity is going to be added and followed by other big projects in Arunachal Pradesh, which partly will come in this plan and partly in the first year of the 12th Plan period. One project is slated to come in 2013 December in Himachal Pradesh.

INDIA is endowed with economically exploitable and viable hydro potential assessed to be about 84,000 MW at 60% load factor (1,48,701 MW installed capacity). In addition, 6780 MW in terms of installed capacity from Small, Mini, and Micro Hydel schemes have been assessed. Also, 56 sites for pumped storage schemes with an aggregate installed capacity of 94,000 MW have been identified. However, only 19.9% of the potential has been harnessed so far.

The Company has been conferred with Mini Ratna (Category-I) status by the Ministry of Power w.e.f. 28th April 2008. This status will not only entitle the Company to incur capital expenditure on new projects, modernization, purchase of equipment, etc. without Government approval up to certain specific limit but also entitle it to establish JV within stipulated limits, enter into technology JV, strategic alliances and certain other benefits.

Hydro Power has higher efficiency (over 90%) compared to thermal (35%) and gas (around 50%).

Financials -
FY-09 Revenues were 2672 Cr (2301 Cr) & NP Rs. 1042 Cr (Rs. 1004 Cr). For last 6 months of FY-09, Sales were Rs. 890 Cr (Rs. 627 Cr) but it suffered loss of Rs. 65 Cr (profit of Rs. 262 Cr). This was due to the higher expenditure which grew by more than 100%. The reserves as on Mar-09 were Rs 6798 Cr.

NTPC –
As on date, the installed capacity of NTPC is 27,904 MW.
Capacity aggregating 13,360 MW is under construction at 11 different locations. For another 8,000 MW plus capacity, they intend to finalize the orders within this year. Apart from thermal power projects, the utility is implementing three hydro power projects. The NTPC will be having 50,000 megawatt (MW) by 2012.