Power-packed debut for NTPC IPO

Says Sashi Krishnan, CEO, Cholamandalam Asset Management Company: ‘‘The power sector is a very important sector for the market and NTPC is the country’s largest power company. Power sector is very important for the market’’.

The eletrifying response to the NTPC IPO even cheered the stock market bulls and sent the benchmark Sensex vaulting by 60 points. Power stocks were in the limelight.

The Rs 10 face value issue of NTPC consists of fresh issue of 43.29 crore equity shares and an offer for sale of 43.29 crore equity shares, and is the second biggest IPO after the recently concluded public offer of Tata Consultancy Ltd (TCS).

The equity size of NTPC post issue will be Rs 824.55 crore equity shares and at the higher end of the band the value of the company is worth Rs 51,122 crore. Retail investors usually invest in the last two days of the issue. ‘‘Retail investors are waiting and watching the performance of the company. The IPO evoked good demand… the government could have disinvested more shares,’’ said a Mumbai stock broker.

TCS launched the biggest IPO in August and raised Rs 5,420 crore. In February this year, ONGC had raised over Rs 10,000 crore through an offer for sale by the government.

NTPC will use the money from India’s to fund an aggressive expansion to feed the growing demands of India’s energy-starved economy.

NTPC accounts for 27 per cent of India’s power generation and at the offered band, NTPC quotes at 10.6-12.7 times March 2004 earnings. Post-IPO, the government’s holding in NTPC will drop to 89.5 per cent. In fiscal 2004, the power generation major posted a net profit of Rs 5,260 crore on a total revenue of Rs 25,964 crore.