Re: Ntpc Ipo oversubscribed in 15 minutes
Ntpc Ipo oversubscribed in 15 minutes
Ntpc Ipo oversubscribed in 15 minutes
India's second-largest initial public offering, a $1 billion-plus issue by National Thermal Power Corp. Ltd. (NTPC), sold out in 15 minutes on Thursday as investors bet the company would profit from fast-growing demand.
The rush to buy shares in India's top power producer boosted the sector and lifted the rupee off an early low on a view that NTPC would help revive foreign investor interest in the country.
NTPC will use the money from India's second billion-dollar IPO in as many months to fund an aggressive expansion to satisfy growing electricity demand in Asia's fourth-biggest economy.
"The future of the power sector is bright in India," said Sanjay Sachdev, managing director of Principal Mutual Fund. "The strong demand, despite a stiff valuation, reflects the long-term positives of the offer," said Sachdev, whose fund bid for shares.
The offer of 865.83 million shares -- a combination of new shares and a sale by the government -- will raise 53.86 billion rupees ($1.17 billion) if it is priced at the top of a band of 52 to 62 rupees per share.
That makes it India's second-largest IPO ever, just behind the 54.2-billion-rupee flotation of top software services exporter Tata Consultancy Services Ltd. in August.
The government's holding in NTPC will drop to 89.5 percent after the IPO.
Stock exchange data showed the NTPC issue, which closes Oct. 14, had attracted bids for 2.7 times the shares on offer by late Thursday. About half the demand came in at 62 rupees per share.
SIZE IS A DRAW
The company would be valued at 511 billion rupees ($11.1 billion) at the top end of the band. That is three times the value of Japanese electricity wholesaler J-Power, whose shares started trading on Wednesday after a $3.4 billion IPO, the world's second biggest this year.
"Size is a big draw for the NTPC issue," said Abhay Aima, head of equities and private banking at HDFC Bank. "From a foreigner's point of view, it is the biggest stock available in the infrastructure sector, which is the key area of growth."
Bankers said the float's sheer size had generated huge demand from foreign fund managers. Half the offer is reserved for qualified institutional buyers.
The robust demand on Thursday raised expectations of a sector re-rating and fired a rally in power stocks.
Tata Power Company Ltd. jumped 4.8 percent, Neyveli Lignite Corporation Ltd. rallied 4.4 percent and Power Trading Corporation Ltd. added 1.3 percent.
The Indian rupee rebounded from a low of 45.91 per dollar to end at 45.85/86, partly buoyed by the NTPC bidding.
"Valuations seem stretched for a utility company," said Pramod Amthe, an analyst with domestic brokerage Prabhudas Lilladher, of NTPC.
But he added that the issue was a long-term buy due to NTPC's cash in hand of 22 rupees per share and the huge growth opportunity for India's power sector.
With an installed capacity of 112,058 megawatts by March 2004, India faced an energy shortage of 7.1 percent last year. The government plans to add 41,110 MW by March 2007.
NTPC, which accounts for 27 percent of India's power generation, plans to meet the growing demand by boosting its generating capacity by 9,370 MW, or 44 percent, by March 2007.
While NTPC has not created the sort of buzz that surrounded the long-awaited Tata Consultancy debut, traders said the market was hungry for quality Indian paper.
"It will be a welcome addition to market capitalisation from the country's largest power producer," said Sashi Krishnan, chief investment officer at Cholamandalam Asset Management.
NTPC faces competition from private utilities such as Reliance Energy Ltd. and Tata Power.
At the offered band, NTPC quotes at 10.6-12.7 times earnings for the year to March 2004. Reliance Energy was at a trailing price-to-earnings multiple of 30 while Tata Power traded at 14.
At the top of its price band, NTPC will be neck-and-neck with Tata Consultancy to be India's fourth-biggest listed company by value, just behind state-run Indian Oil Corp Ltd.
The rush to buy shares in India's top power producer boosted the sector and lifted the rupee off an early low on a view that NTPC would help revive foreign investor interest in the country.
NTPC will use the money from India's second billion-dollar IPO in as many months to fund an aggressive expansion to satisfy growing electricity demand in Asia's fourth-biggest economy.
"The future of the power sector is bright in India," said Sanjay Sachdev, managing director of Principal Mutual Fund. "The strong demand, despite a stiff valuation, reflects the long-term positives of the offer," said Sachdev, whose fund bid for shares.
The offer of 865.83 million shares -- a combination of new shares and a sale by the government -- will raise 53.86 billion rupees ($1.17 billion) if it is priced at the top of a band of 52 to 62 rupees per share.
That makes it India's second-largest IPO ever, just behind the 54.2-billion-rupee flotation of top software services exporter Tata Consultancy Services Ltd. in August.
The government's holding in NTPC will drop to 89.5 percent after the IPO.
Stock exchange data showed the NTPC issue, which closes Oct. 14, had attracted bids for 2.7 times the shares on offer by late Thursday. About half the demand came in at 62 rupees per share.
SIZE IS A DRAW
The company would be valued at 511 billion rupees ($11.1 billion) at the top end of the band. That is three times the value of Japanese electricity wholesaler J-Power, whose shares started trading on Wednesday after a $3.4 billion IPO, the world's second biggest this year.
"Size is a big draw for the NTPC issue," said Abhay Aima, head of equities and private banking at HDFC Bank. "From a foreigner's point of view, it is the biggest stock available in the infrastructure sector, which is the key area of growth."
Bankers said the float's sheer size had generated huge demand from foreign fund managers. Half the offer is reserved for qualified institutional buyers.
The robust demand on Thursday raised expectations of a sector re-rating and fired a rally in power stocks.
Tata Power Company Ltd. jumped 4.8 percent, Neyveli Lignite Corporation Ltd. rallied 4.4 percent and Power Trading Corporation Ltd. added 1.3 percent.
The Indian rupee rebounded from a low of 45.91 per dollar to end at 45.85/86, partly buoyed by the NTPC bidding.
"Valuations seem stretched for a utility company," said Pramod Amthe, an analyst with domestic brokerage Prabhudas Lilladher, of NTPC.
But he added that the issue was a long-term buy due to NTPC's cash in hand of 22 rupees per share and the huge growth opportunity for India's power sector.
With an installed capacity of 112,058 megawatts by March 2004, India faced an energy shortage of 7.1 percent last year. The government plans to add 41,110 MW by March 2007.
NTPC, which accounts for 27 percent of India's power generation, plans to meet the growing demand by boosting its generating capacity by 9,370 MW, or 44 percent, by March 2007.
While NTPC has not created the sort of buzz that surrounded the long-awaited Tata Consultancy debut, traders said the market was hungry for quality Indian paper.
"It will be a welcome addition to market capitalisation from the country's largest power producer," said Sashi Krishnan, chief investment officer at Cholamandalam Asset Management.
NTPC faces competition from private utilities such as Reliance Energy Ltd. and Tata Power.
At the offered band, NTPC quotes at 10.6-12.7 times earnings for the year to March 2004. Reliance Energy was at a trailing price-to-earnings multiple of 30 while Tata Power traded at 14.
At the top of its price band, NTPC will be neck-and-neck with Tata Consultancy to be India's fourth-biggest listed company by value, just behind state-run Indian Oil Corp Ltd.
