Power Grid FPO Review

Power Grid Corporation of India has come out with a further public offer (FPO) of 78.71 crore equity shares of Rs.10 each, comprising of fresh issue of 60.19 crore shares and an offer for sale of 18.52 crore shares by Government of India (GoI), in the price band of Rs. 85 to Rs. 90 per share. Retail investors and employees are offered a 5% discount on the discovered price.

Details of the issue:

Issue Open: Dec 03, 2013 - Dec 06, 2013
Issue Size: 787,053,309 Equity Shares of Rs. 10
Issue Size: Rs. 6,689.95 - 7,083.48 Crore
Face Value: Rs. 10 Per Equity Share
Issue Price: Rs. 85 - Rs. 90 Per Equity Share
Market Lot: 150 Shares.

Power Grid owns and operates more than 90% of India’s inter-state and inter regional electric power transmission system and the company reported revenue of Rs. 7,559 crore and PAT of Rs. 2,280 crore for H1FY14, resulting in EPS of Rs. 4.91 on an equity of Rs. 4,630 crore. The company had earlier came out with a similar FPO in 2010 at a price of Rs.90 and the returns from that FPO were mediocre. Similarly, the current FPO is done mainly to meet the disinvestment targets and there is not much for investors or even traders to flip, unless the issue is priced at Rs.85. Considering fundamentals and the past performances of the issue,  investors can skip this issue.