I thought I had written about enough IPOs this week, but how could I pass up writing about the SJVN IPO, which is promoted by the president of India herself!
First off, this is a power company that generates hydro – electric power, and runs the Nathpa Jhakri Power Station (NJHPS) on the Sutlej River in Himachal Pradesh. It is the largest hydro – electric power generation facility in India with a capacity of 1500 MW. They are currently constructing another 412 MW facility called the Rampur Project, which is downstream the NJHPS. This project is expected to complete in 2013.
They have also been awarded the rights to develop two hydroelectric projects with generation capacity of 825 MW by the state government of Himachal Pradesh; they will have a 51% stake in these two projects.
They have also entered into MoU with the state government of Uttarakhand for three hydroelectric projects with an expected aggregate generation capacity of 363 MW.
SJVN is also participating in a joint venture with NHPC Limited and the Manipur state government for the development and operation of a 1,500 MW hydroelectric power project to be located in Manipur.
What’s more, they SJVN is also been awarded the right to to construct and operate on a build, own, operate and transfer (BOOT) basis, a 900 MW hydroelectric power project to be located in Nepal.
Through these projects, their total installed power generation capacity will be increased by approximately 3,588 MW.
The company had revenues of Rs. 16,348.4 million for 2009, and a net profit of Rs.7,593.2 million on it. For the nine months ended Dec 31st 2009 – the company has clocked revenues of Rs. 15,100 million and profits of Rs.7,753.7 million on it.
The company had positive cash flow from operations for each of the past five years, and increased its cash by Rs. 5,778.4 million in the last year. The EPS for 2009 was Rs. 1.85 and the annualized EPS for this year is Rs. 1.89.
The issue price is between Rs. 23 and 26, which is lower than the Rs. 30 that was reported earlier. The issue has also been graded 4 on 5, which is among the higher ones when you think about the companies that have come out with recent IPOs.
There is also a 5% discount for retail investors and employees, and the lower price (compared to what was reported earlier), and the discount shows that the government is trying to get the retail investors back in the game and recognize that some of the recent offers, whether private or government have been overpriced.
I looked at the subscription numbers today, and the retail part is just subscribed 0.15 times, so I don’t know whether this is low enough or not, but is certainly a good start. It will be interesting to see how this one plays out, and I think that will have a bearing on how the future government IPOs are priced as well.
What are your thoughts on this? Do you see feel the lower price is good enough, or do you feel they had scope to still come down a bit?