Power Grid FPO Review

by Rajesh Narayanan · 1 Comment

Power Grid Corporation of India, India's biggest power transmission company is coming out with follow-on public offer of about 84 cr shares , which comprises a fresh issue of 42 cr shares and adding to that , an offer for sale of 42 cr shares by the President of India. The proceeds will be utilized for constructing country-wide high capacity power transmission corridors.

Details of the issue:
Issue Open: Nov 09, 2010 - Nov 12, 2010.
Face Value: Rs.10 Per Equity Share.
Issue Price: Rs.85- Rs.90.
Discount of 5% is available to retail investors.

The company's second quarter results were quite impressive. It announced a 41 percent increase in its net profit to Rs.651 crore and Rs.1,354 crore in first six months compared to the Rs.1,006 crore in 2009. The annualized EPS for the current year works out to Rs.6 and the FPO price of 85-90 makes the company available at 15 P/E, which is reasonably good. Currently the book value stands at Rs.40 and the offer is made at 2.25 times the book value.

Considering sound fundamentals, investors can subscribe to this issue with a medium to long term view. After the successful issue of Coal India, the Power Grid issue is also likely to be a hit.

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