Jsw Energy IPO Analysis Allotment Status Listing

Jsw Energy IPO Analysis Allotment Status Listing

JSW Energy has out with its initial public offering (IPO), with an issue of 23.8 – 27.4 crore equity shares. At the offer price of Rs 100-115, with retail discount of Rs 5, the issue would raise around Rs 2,700 crore from the primary market. The issue represents around 15-17% of post IPO equity capital.

The company would command a market cap of Rs 16,400- Rs 18,900 crore at its price band. Of the proceeds, the company plans to invest Rs 2,140 crore for generation power projects and a transmission and mining project. It also plans to repay corporate loan of about Rs 470 crore from the proceeds.

Considering the status of its projects, projected timelines and funding plans, the stock looks at a comfortable position. Investors can subscribe to the issue with a 2-3 year outlook.

Edelweiss has recommended investors to not to subscribe to initial public offering of JSW Energy. It says that there appears to be limited/no upsides in the IPO.

“Our NPV–based valuation of JSWEL stands at INR 82-84/share. We believe that the price band of INR 100-115/share leaves no margin for error. Execution delays, high coal prices, change in regulations in Indonesia, and operational risks pertaining to lignite plants are some of the key risks. We recommend ‘DO NOT SUBSCRIBE’ to investors as there appears to be limited/no upsides,” the brokerage report said.

“JSWEL has 995 MW of operational capacity, 2,655 MW under construction, and 7,740 MW under development. Out of the operational 995 MW, 560 MW will be sold on merchant basis from FY11 (as per management). Out of the 3,650 MW operational and under development capacities, ~46% output is expected to be sold on merchant/short-term basis and ~54% will be sold on long-term basis by FY12.

The company has achieved financial closure for 3,140 MW of operational and under construction projects. Financial closure of 270 MW RWPL-II lignite plant and 240 MW Kuther hydro project is pending. However, JSWEL has placed the BTG order for RWPL-II. It has also submitted a revised DPR to CEA for Kuther project.

Besides the 3,650 MW of projects under construction, JSWEL is planning to develop 7,740 MW projects by 2016,” the IPO note added.

Read more @ http://economictimes.indiatimes.com

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