Power Grid FPO price band fixed between Rs. 85 – 90

by Manshu on November 7, 2010

in IPO/NFO

A lot of you have been interested in knowing the price band of the Power Grid FPO, so I thought I’d do a quick post when I saw MSN India report that the Power Grid FPO price band has been fixed at Rs. 85 – 90.

I think this should cheer a lot of people, as I saw a few tweets that showed people will be interested in a price below Rs. 100.

There is of course a 5% discount for retail investors, so that brings down the effective price a bit more. The issue will open on 9th November, and close on 12th November for retail investors.

Click here to read some key Power Grid FPO numbers

Click here to read how Power Grid performed since listing

{ 22 comments… read them below or add one }

mh November 7, 2010 at 8:27 am

this will crush the powergrids present market of Rs 102

Reply

Ritesh Shah November 8, 2010 at 9:35 pm

hello,
i have one question. today, powergrid has total ~420 cr. shares in market (from official website of NSE). now this FPO is offering ~42 cr fresh new shares and ~42 cr shares from presidents of india. Thus, total ~84 cr shares are offered thru this FPO. so my question is that after allotment what will be total shares in market? is it 1) 420 + 84 cr or 2) 420 + 42 cr as only 42 cr fresh new shares are offered. also, i read that this ~84 cr FPO is 20% offer in total. what does that mean?

Reply

Manshu November 9, 2010 at 5:10 am

Hi Ritesh,

Here is how the numbers work out.

Currently, the total shares are (A): 4,208,841,230
The government currently holds (B): 3,634,908,335 (86.36%)
So, others hold (C): 573,932,895 (13.64%)

Government will sell these many of their own shares (D): 420,884,123
And new shares issued will be the same (E): 420,884,123

So, the new total shares will be (A) + (E) Existing + New: 4,629,725,353
Out of which the government will hold (B) – (D): 3,214,024,212
Others will hold (C) + (D) +(E): 1,415,701,141

So post the issue Government will hold 69.42% of the company, and others will hold 30.58% of the company.

20% in total means that if you take the number of shares offered in this FPO as a percentage of the existing capital then you will come at 20%, so (D) + (E) / (A).

Let me know if this answers your question or if anyone sees any mistakes or a different number somewhere. I took these numbers from the Red Herring Prospectus.

I should probably make a mini post out of this.

Reply

Ritesh Shah November 9, 2010 at 8:44 pm

thanks Manshu for details. now it’s clear to me. so now total shares after FPO in market is 10% more than they are now before FPO.

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Manshu November 10, 2010 at 3:10 am

Thanks for bringing this up Ritesh, I did make a post out of it in the end – published today. Thanks!

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anju November 9, 2010 at 12:37 am

Hello,
I have 100 shares of powergrid @148 since2007, now I want to invest in this FPO, to cover my losses, So what u think how much gain is possible through this FPO?

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Manshu November 9, 2010 at 4:20 am

Sorry Anju, but price predictions are something that are not done on this blog. Sorry about that….I wish I had a realistic idea on what to expect, but I don’t, so no predictions of that nature here.

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BP November 9, 2010 at 6:41 am

Your post mentions that there is a 5% discount for retail investors but I could not find any evidence of this elsewhere. Could you please clarify and confirm that there is indeed a 5% discount for retail investors?
Thanks and regards.

Reply

Manshu November 9, 2010 at 7:24 am

I read about the proposed discount in the red herring prospectus, and some quick Googling revealed some Moneycontrol, Economic Times and NDTV articles that mention the discount as well.
http://economictimes.indiatimes.com/markets/stocks/views/recommendations/Positive-on-Power-Grid-Gaurang-Shah-Geojit-BNP-Paribas-Financial-Services/articleshow/6894885.cms

http://profit.ndtv.com/news/show/power-grid-corp-fpo-opens-on-tuesday-plans-to-raise-rs-8000-cr-119015

http://www.moneycontrol.com/news/ipo-issues-open/power-grid-corp-fpo-co-offers-5-discount-to-retail_496683.html

Could you please tell me if you read somewhere that the no discount will be given or something along those lines?

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BP November 9, 2010 at 7:33 am

No, I did not read anything saying there is no discount, but I just wanted to be sure because the NSE website didn’t mention anything. The application form didn’t show anything either. The application form is unfortunately in super-small fonts and I might have missed it even if it specifies that the discount exists, so I just wanted to confirm.
Thanks and regards.

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BP November 9, 2010 at 7:34 am

Oops, sorry I created a new post instead of ‘replying’ to the earlier one.

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Manshu November 9, 2010 at 8:05 am

Don’t worry about it. Thanks for replying because only a very few people ever bother to reply πŸ™‚

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jai November 10, 2010 at 3:07 am

hi
if any want to invest in powergraid then call on this number
09717059592
Jai Pathak

Reply

jai November 10, 2010 at 3:16 am

if any one want to investment in powergraid FPO or want to open D-MAT A/C then contact me on this no09171059592
Jai Pathak

Reply

VINAYAK GODBOLE November 10, 2010 at 11:17 pm

In case of Coal India IPO Government pocketed full amount of their unloading share i.e. face value plus premim and Coal India did not receive the amount. Same thing will be repeated here, is it?

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Manshu November 11, 2010 at 11:39 am

The part of the proceeds from selling shares that are newly created will go to the company, and part of the proceeds from the existing lot will go to the government.

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Karan Vora November 11, 2010 at 10:11 pm

hI ALL,

Can any one tell me when will power grid FPO will be listing?

thanks and regards,
Karan Vora

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Manshu November 12, 2010 at 4:45 am

Hi Karan,

The listing should be towards the end of this month – the dates haven’t been declared yet, and when they are I will update this post with it.

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Karan Vora November 15, 2010 at 3:43 am

Thanks Manshu,

what should be the target price of Power grid.

please help..

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Manshu November 15, 2010 at 4:19 am

Sorry Karan, but I don’t get into price targets and any of those prediction type things on this blog.

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Karan Vora November 17, 2010 at 3:01 am

i understand..

was just wondering why Power Grid didnt fell to 90 level even though the FPO was in range of 85-90.

One question.. can one hold it for 3 or 6 months and expect some magic of 120.. as i see in the past one year it has hardly moved beyond 117-119 level

thanks in advance..

πŸ™‚

Reply

Manshu November 17, 2010 at 7:54 am

With respect to the first one there are just so many factors that influence demand and supply that an extra 10% stock in the market doesn’t necessarily imply that the stock falls down to the lower level. It may still fall down to 85, but doesn’t mean that it’s because this issue was priced at 90 with a 5% discount.

One of the most interesting examples of price movements I’ve seen is when GM declared bankruptcy in 2009, and the stock still traded at 75 cents or so, and later on I discovered that the stock was part of the index, and so index funds had no option but to buy it even though the stock had no underlying value.

http://www.onemint.com/2009/05/29/why-gm-is-not-zero/

I guess the key is to remember that there is a lot we don’t know which may influence the price.

The second question – I honestly haven’t a clue in the world.

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