Tuesday, 1 September 2009

NHPC makes a tepid debut

Shares in state-run NHPC Ltd rose by 5 percent in their trading debut, lagging market expectations after the power company's $1.25 billion IPO was heavily oversubscribed.

The muted debut is the second in a row from a major Indian company and may dampen enthusiasm for future listings.

Last month, shares in private-sector utility Adani Power gained less than 1 percent on their first trading day after the firm raised $630 million.

NHPC, a hydropower company, saw its offering subscribed more than 20 times in the first new listing by a state company in 18 months. India's deficit-wracked government is planning further stake sales in state firms in order to help raise money.

"The listing is fairly below market expectations which was around Rs 40-42," said Ambareesh Baliga, vice-president at Mumbai-based Karvy Stock Broking.

"Promoters of forthcoming IPOs would have to ensure that pricing is not as aggressive as it was in this case. It is a clear signal to them that they should leave something on the table for investors."

At 0532 GMT, shares in NHPC were up 5.3 percent at 37.85 rupees, compared with the IPO price of 36, which was the top end of the indicated band.

The stock touched a high of Rs 39.75 after having made a debut at 37 rupees. The benchmark Mumbai index was up 1.4 percent.

"Pricing was a bit stiff and pressure is coming from people who borrowed money to invest in the IPO," said V.K. Sharma, head of research at Anagram Stock Broking.

NHPC Chairman S.K. Garg told reporters the listing was in line with the company's expectations and the firm was confident about its growth prospects.

The company expects net profit to rise to more than Rs 11 billion ($226 million) in the fiscal year to March 2010 from Rs 10.75 billion last year as it focuses on new projects, he said.

NHPC's capital expenditure in this fiscal year is likely to be Rs 46 billion, Garg said, adding the company had already spent about Rs 20 billion this year on new hydropower projects.

Source: EconomicTimes

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