Adani Power Limited has recently posted its draft prospectus for filing an IPO. Here is an overview of Adani Power Limited IPO
Business of Adani Power Limited
Adani Power Limited will be in the business of developing, operating and maintaining power projects in India. It is part of the Adani Enterprise Limited, which is a large Indian conglomerate with revenues of over Rs.196,097.10 million in fiscal 2008. The parent company is one of the three largest coal traders in India and the largest power trading company in India (in the last three years).
The group itself is looking at vertical integration with power projects and it currently has presence in:
- Coal Mining
- Coal Trading
- Shipping
- Power Generation
- Power Transmission
- Power Trading
- Owning and Operating a SEZ
Adani Power Limited has four thermal power plants that are in various stages of development:
1. Mundra Phase 1 & 2 with a capacity of 1,320 MW. Both phases are split into sub – generation of 330 MW each. The first phase of 330 MW each are expected to get commissioned by June 2009 and the full project is expected to get commissioned by Feb 2010.
2. Mundra Phase 3 with a capacity of 1,320 MW, out of which 660 MW will be commissioned in Jan 2011 and the remaining by June 2011.
3. Mundra Phase 4 project with a capacity of 1,980 MW, out of which 660 MW will be commissioned by Aug 2011 and the remaining by April 2012.
4. Tiroda Power Project with a capacity of 1,980 MW, out of which 660 MW will be commissioned by July 2011 and the remaining by April 2012.
All dates are current estimates.
The company has applied for sector specific SEZ approvals for all its coal projects. If granted, this will give them substantial tax advantages.
Since Adani Power is part of the Adani group which is a major coal producer and trader — it will benefit in terms of obtaining raw materials in a timely and secured fashion.
Adani Power is located in the western region and has got a locational advantage; both in terms of sourcing as well as distribution. The power plants are located in the rapidly industrializing areas of Maharashtra and Gujarat and will benefit from the growth of these states.
India faces acute power shortage and with the deregulation in the power sector — there are plenty of opportunities up for grabs for private sector players. According to CERC the power shortage at Dec 2008 was 15,175 MW and so the company exists in a sector which is set for growth and has inherent demand.
Key Risks Facing Adani Power Limited
1. No Operating History: Adani Power has no current operational power projects or any other revenue generating activity that can provide a basis for evaluating its business.
2. Long Gestation Period: Power projects have a long gestation period and Adani Power will take a long time to get into the positive cash flow generating territory.
3. Significant Indebtedness: Adani Power has assumed significant debts to the tune of Rs.49,919.04 million and this increases its vulnerability to downwards economic conditions. Since the company has so much debt already — it limits Adani Power’s ability to raise more cash in the future if required.
4. Potential Promoter Conflict of Interest: Adani Power will rely heavily on its promoters to provide it financial know – how and access to key personnel. Since, some promoter group companies operate in the same business areas — this poses potential conflict of interest.
Financial History
Since the company has not engaged in any commercial activity till date there isn’t enough financial information to go evaluate the IPO.
Objectives of the Adani Power IPO
Adani Power is getting in the IPO to raise funds primarily for the following:
1. Finance the Mundra Phase IV 1980 MW Power Project partly
2. Fund the subsidiary that will engage in the construction and development of the 1980 MW Tiroda Power Project.
Conclusion
These were some key features of the Adani Power IPO and evaluating these benefits and risks should give you a better understanding of the company and help decide whether you should be invested in such a company or not.
This site has regular features about IPOs, FDs and other investment ideas, if you would like to get that content by email, please click here.
NHPC IPO is the next big power IPO, to read about that click here.
Ratings:
Loading ...
{ 39 comments… read them below or add one }
First of all I am liking onemint new look! Hope to see more stock/IPO specific analysis. That dosen’t mean we don’t like economics stuff. This is the right time to eneter Indian Market.
Thanks Biplab!
For a long time, there were hardly any IPO filings, so I had stopped writing about it. But, they are slowly started to flow in again.
hi, adani has a long history of operating excellence and one of the trustworthy company. Its performance will depend on the personnels employed at key posts.
what a IPO will be ,it will break all the up coming IPO and definitely it will be oversubscribed maximum.ADANIPOWER,WILL BE THE EMERGING IPO
Adani Power- Too Futuristic
Existing Implementation- NIL
The normal valuations in power sector are INR 5.5- 5.75Cr per MW as detected from the NTPC valuations.
Company
Capacity in MW
Market Cap
INR/ Cr per MW
NTPC
27944
160745
5.8
CESC
975
3624
3.7
(Source: Annual Reports and BSE close price as on 28/06)
Adani Power
Plans Sr
Particulars
Financial year in which projected to be implemented- No of MW
Mar-10
Mar-11
Mar-12
Mar-13
1
Mundra Phase 1 and Phase 2
1320
1320
1320
2
Mundra Phase III
1320
1320
3
Mundra Phase IV
1980
4
Tiroda Power Project
1980
Total Capacity
1320
2640
4620
1980
Proposed Market CAP @ INR 5.5 Cr per MW in Crores
7260
14520
25410
10890
Adani Power Plans:
Issue of 33.77 crore equity shares to raise almost 2193 Crores
It means FV INR 10 and Premium of INR 55 approximately as 2193 crores = 33.77*65
The total float including promoter float post issue is expected to be 217.95 crore equity shares
Therefore 217.95 crore equity shares * INR 55 equals 14166 crores.
It means at Zero Capacity, the group wants a valuation of INR 14,166 crores
It means at 1 year forward 1320 MW, the valuation expected is INR 14,166 crores i.e INR 10.7 crores per MW
It means that there is not going to be any ROE for investor and it is venture funding in disguise.
Closing
NTPC and CESC are better opportunities and one must avoid such issue so as not to make another Reliance power out of it
de,sir,
wt.about adani power ipo,i trust this ipo????
I think Adani Power IPO will be great.
The valuations depend on the price band.
If the price band or the listing is above Rs.100 then it will be great.
But instead of subscribing IPO, buy Adani Enterprise it will be indirectly go up if the listing is great… Also Adani Enterprise is a treat long term buy even at this level, we might not see these levels of Adani Enterprise post IPO if Adani Power listes above Rs. 90. Its best to buy Adani Enterprise, less downside, much more upside…
It looks like a better issue.
if you compare with rel power.
they have better deadlines and their parent company is Coal mining and transmission , which will ensure the timely supply of fuel which is very crucial for a power plant.
i think price band is also attractive.
my recomendation is apply.
Cheers
Satender
http://www.ghartak.in
what is the price band(CUT-OFF) of ADANI-IPO ?
THANKS.
The price cut off for Adani IPO is between 90 and 100.
RELIANCE-POWER, collect the money from market only by the fame & public sentiment of the market,they don;t generate power till now, they generate power approx.year 2012.but in the case of ‘ADANI-POWER, they still in the business of power generation & there some power plant will produce & distribute power in some state.
so. the growth in money market the ADANI-POWER (IPO) is strong and RELIABLE.
thanks.
puri.
pls provide some details about Adani Power IPO as such minimum application amount and ratings by onemint etc…
Hi,
I wanted to know whether adani power is best or NHPC IPO will be the best to apply
Cheerss
Does it will work ?
As adani Group has not that much fame in market like Rel.
Also Need to know End use and other Details Please…
Need to know about the Grade System ?
Adani power is really great ipo.. i think averyone should invest in that..
go 4 Adani power , it’s a good deal
where are adani group power plant
i want to know how to buy an ipo of adani power
can every person buy an ipo of adani power
yes every person
hi,
i guess adani power ipo is gr8 and cut off is around 60
are adani power is great? i itrest invest Rs100000.how to invest ? plz tel me.
Now Yoy may invest in Adani, Adani is always great after getting bellow Rs 80/-.
Hi all,
The minimum amout as per the information I recieved is Rs 6500 to invest in Adani Power .
N yes , I will be a part of this huge investment for this unique IPO after a long time .
how to buy adani power ipo through online
Online you need a brokerage account to apply for IPOs like ICICI Direct or Sharekhan or something.
NHPC IPO will be the best to apply
adani power ipo is very good.i apply the ipo.
What is the listing date of Adani Power???????.
hi,
Listing of it most probably on 20 august 09
When ADANI is going to be listed?
When Adani power listed?
It has listed today. Traded around the issue price.
I think for long term Adni Power may perform well as India is already facing power shortage problem which may positivelly work for Adni Group…………………………
hi i didnt get refund of adani power ipo so ll u just guide me wat to do and how to get refund
The first step would be to call your broker and find out about it, and then you can take it from there.
when will adani power commence its production?
hi to know more about basics of IPO do visit
http://www.theequitymarkets.com/ipo_faq1.htm
here all your queries regarding IPO are answered
regards
alok