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IPO Update: Indiabulls Power Ltd.

In Quest for Power “full” India

Indiabuls Power Ltd. has entered the capital markets with an issue of 33.98 Crore shares of Rs. 10 each at a price band of Rs. 40-45 per share. Investment Guru is of the view that India Bulls is just another player trying to leverage the India Power Story like Adani, Reliance and Tatas. The company is currently in the process of setting up its power plants will take 3-4 years to start commercial operations. It’s a story similar to Adani power and hence it’s more of a long term play.

• The Company is a subsidiary of IBREL, a part of the Indiabulls Group.
• IBPL is currently executing five power projects: 1,320 MW Amravati Power Project – Phase I, 1,335 MW Nashik Power Project, 1,320 MW Bhaiyathan Power Project, 1320 MW Amravati Power Project – Phase II and 1320 MW Chhattisgarh Power Project.
• The company expects to sell 75 per cent of the power generation via a long-term power purchase agreement (PPA) and balance through trading of power.
• Since the company has not yet commenced the operations, there is no financial performance to compare with other players.
• The projects are expected to be funded through a D/E ratio of 75:25.
• It is also developing four medium size Hydro Power Projects in Arunachal Pradesh aggregating to 167 MW. Indiabulls has also entered into MoUs with the Govt. of Madhya Pradesh and Jharkhand for setting up of 2640 MW & 1320 MW Thermal Power Projects in each of these States respectively.

Investment Guru is of the view that we have already seen what happened to the Adani and NHPC issues and there is no reason why Indiabulls should get different treatment. The stock is currently commanding a premium of Rs. 4-5 in grey markets but for that matter even Adani commanded a premium in grey matter. This is a pure long term play and the stock will become dull after listing sensations until news of developments on the operational front starts coming in. For those who are looking for listing gains, if the promoters decide to price at a lower band , you can look for a 10% gain otherwise you would have to pray for your luck .

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Stock Review : Power Grid Corporation

Safety Grid for your Portfolio





Power Grid Corporation was incorporated as National Power Transmission corporation limited on October 23rd 1989 with an objective of forming a Nationwide Power Grid which would pave the way for integrated operation of central and regional transmission systems.



In line with this objective, the transmission assets of power generation companies such as NTPC,NHPC,NEEPC,Neyveli Lignite, NPCL,THDC were transferred to Power Grid Corporation at various points in time. On 31st Dec.1998, the company was notified as Central transmission utility by the government of India pursuant to takeover of all the regional load despatch centres.





Business of PGCIL

• The core business of the company being transmission of electric power, it owns, operates and build a large network of transmission lines and related infrastructure.


• The company has also diversified into Telecom sector. It is only company having Optic Fiber network using Optical ground wire on power transmission lines. It has an all India Broad Band Telecom Network of about 20,733 Kms connecting more than 129 cities across the country.


• The company has license under Infrastructure provider category, NLD license for end to end Bandwith and ISP Category ‘A” license to provide internet services.


• Power grid corporation also provides engineering services in power transmission business internationally


• The company provides consulting services to clients in power sector in terms of building and maintenance of transmission lines.

Performance Analysis

• PGCIL’s earnings are directly related to its capex plans for laying the transmission lines. It commissioned projects worth INR 6,800 crore in first 9 months of FY 11 out of the target of 9000 crore. The company targets capitalisation of 10,000 crore in FY 12.


• The company has announced its plan of commissioning 1.2Lac Crore of projects in the 12th Plan which is twice the capex target of 11th Plan.


• For the 9 month of FY 11 the company posted Revenue of 6178 Crore and Net profit of 1946 Crore. For FY10 the company posted revenue of 7127 Crore and Net profit of 2041 Crore.

Investment Rationale

• The company provide an excellent way to invest in the Power story of India.


• Aggressive Capex plans would translate into better future earnings for the company. The past trends indicates that the company has met its targets set earlier.The FY12 guidance on capitalization provides visiibility into continued momentum of strong earnings growth.


• PGCIL should prove to be an ideal stock to provide the safety grid to an investor portfolio

Additional Readings

Power Grid Website



Disclosure : I have a long position in this stock.

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