NHPC IPO subscribed 3.5 times on day one

Receives bids for 594.09 crore shares

The initial public offer (IPO) of state-run hydro power generation firm NHPC received an overwhelming response on the first day. The issue was subscribed by a whopping 3.54 times. The IPO got bids for 594.09 crore shares as against 168 crore shares offered by the company. More than 4.29 crore shares were bid at cut off price.

The qualified institutional buyers (QIBs) category was subscribed six times. Investors in this category put in bids for 589.31 crore shares as against 98.12 crore shares reserved for this category.

The non institutional investor category, made up of high net worth individuals and corporate investors, was undersubscribed. The category mopped up bids for 10.21 lakh shares as against 16.35 crore shares set aside by the company.

Same was the case with the retail investor category, which was undersubscribed as well. Total bids in this category were for 4.67 crore shares as against 49.06 crore shares assigned by the company.

NHPC is selling 168 crore shares comprising of 5% divestment of stake by the government and infusion of 10% fresh equity. The price band for the IPO is Rs 30 to Rs 36 per equity share.

The issue will constitute 13.64% of the post-issue capital of NHPC. The IPO closes on 12 August 2009.

NHPC is the largest hydroelectric power generating company in the country. It has 13 operating hydro electric power (HEP) plants with an installed capacity of 5,175 megawatts (MW) including two power stations of total 1,520-MW capacity set up through its joint venture subsidiary Narmada Hydroelectric Development Corporation (NHDC). Current total generating capacity is 5,134.2 MW, taking into account the downgrade of the capacity ratings of Loktak and Tanakpur power stations by the Central Electricity Authority.

NHPC is constructing 11 additional hydroelectric projects, which are expected to increase the installed capacity by 4,622 MW. These plants, barring Teesta Low Dam IV, are mostly in the north and northeastern states and scheduled to be commissioned between December 2009 and March 2013. The Teesta Low Dam IV project is coming up in the Darjeeling district of West Bengal.

NHPC is also awaiting government sanction to build another five projects with an anticipated capacity of 4,565 MW on its own and another 2,166-MW capacity projects through certain JV projects. In addition, the company is surveying and investigating proposals for nine additional projects totaling 7,255 MW of anticipated capacity.

Apart from development and operation of HEP projects, NHPC also develops, designs, and delivers HEP station to clients. The company has executed two HEP projects, i.e. Kurichhu HEP in Bhutan and Devighat HEP in Nepal, on contract. Further, it also provides technical, management advisory and consultancy services to domestic and international clients.

NHPC's consolidated net profit rose 3% to Rs 1244.15 crore on 19.2% growth in sales to Rs 3493.71 crore in the year ended March 2009 (FY 2009) over the year ended March 2008

On post-IPO equity of Rs 12300.74 crore, the EPS for FY 2009 works out to Rs 1 and the PE is 30-36 times at the offer price band of Rs 30-Rs 36