This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in
Power Grid follow-on public offer (FPO) finally got closed yesterday. The issue got 6.74 times oversubscribed and the company successfully raised around Rs. 7,000 crore from the issue.
As the issue has got closed now, the investors are quite eager to know what price has been fixed by the company to issue these shares at, when they will come to know how many shares have been allotted to them, when these shares will get credited to their respective demat accounts, when these shares will be admitted to trade on the stock exchanges.
Here are some of those post-offer FAQs regarding Power Grid FPO and my responses to the best of my knowledge and research capabilities:
How many times the issue has got subscribed and how many shares will I be allotted? I have applied for ‘X’ number of shares, what is the system for allotment – is it based on lottery system, proportionate system or guaranteed allotment of shares?
Vivek also put up a similar query today.
Vivek December 7, 2013 at 4:05 pm
How many shares can I get for 2L application if issue is subscribed 2.17 time? I will get 6 lots minimum- how much more?
The issue has got oversubscribed to the tune of 6.74 times overall and 2.17 times in the retail investors category. Approximately 3,89,142 bids have got placed on the stock exchanges during the offer period.
As per the new rules for Basis of Allotment – “Every retail participant gets a minimum bid lot allotted, irrespective of his/her application size. This is subject to availability of shares.” So, the allotment system is neither lottery based nor it would be proportionate or guaranteed allotment.
As the retail investors category in the issue has got 2.17 times subscribed, I think there are enough number of shares available in this category for every retail investor to get at least one lot of 150 shares allotted. In a way, it is guaranteed allotment, but only of 150 shares.
If you’ve applied for 2,250 shares or 2,100 shares, it is no guarantee that you’ll get these many shares allotted, even in a proportionate manner.
You will get to know the exact number of shares allotted to you only once the basis of allotment gets finalised.
What price has been fixed by the company to issue these shares at?
Simple asked me to guess the “Cut-Off” price yesterday.
Simple December 6, 2013 at 11:53 pm
Hi Shiv!
Retail subscribed @ 2.17 times. Any guesses about the cut off price?
The board of Power Grid is scheduled to meet on Monday and after its consultation with the book running lead managers (BRLMs), will fix the final issue price i.e. the cut-off price. I expect the cut-off price to get fixed at Rs. 90 per share. If it gets fixed below this price, it will be a bonus for the investors.
By when will I get to know how many Power Grid shares have been allotted to me? If I get certain number of shares allotted, by when will the shares be credited to my demat account?
SPPatel, a relatively new participant in the FPO/IPO process, wanted to know about the date by which he can expect the shares to get allotted and the allotted shares to start trading.
SPPatel December 6, 2013 at 11:52 am
Dear Shiv,
Can you tell me the allocation date of FPO. When it will be available to my account. And when i can do the buy/sell transaction. Actually i dont know much about FPOs. So i am asking these kind of question. Thanks in advance.
Post closure of the FPO, this is the most common query the investors have and the following table, which I have taken from page 418 of the Red Herring Prospectus filed by Power Grid dated November 15, 2013, is the best source to get all our queries answered.
Power Grid, in consultation with the NSE, the designated stock exchange, will finalise the basis of allotment on or about December 16th. As we can check from the table above, we’ll get to know the number of shares allotted to each of us either by December 16th or December 17th. The Registrar to the issue will initiate the refund process as early as December 17th.
After approval of the basis of allotment by the NSE, an allotment advice will be sent to each successful investor, who has been or is to be allotted Power Grid shares.
Investors can expect the FPO shares to get credited into their respective demat accounts latest by December 18th or December 19th. Once these shares get fully allotted, we can expect these shares to start trading on the stock exchanges by December 20th.
Power Grid will ensure that the whole FPO process gets completed within 12 working days from the closing date of the issue, including the finalisation of basis of allotment, refund of excess investment amount, allotment & credit of shares to the successful bidders and commencement of trading.
If there is any delay in the refund of investment amount, Power Grid will have to pay interest at the rate of 15% per annum.
Finally, if you have any other FPO related query, please share it here. I’ll try to answer it as soon as possible. If you have any allotment or refund related grievance, then you need to contact Karvy Computershare, the Registrar to the issue.
I’ll keep updating this post as and when I get any post FPO info. If any of you get info about the issue price, allotment, refund, listing or any related news, please share it here.
Issue Price Fixed At – Rs. 90 per share with discount of Rs. 4.50 for the Retail Investors
(Source: Times of India)
Refund Process Started From – December 17th (Updated on December 17th)
Credit of Equity Shares into Demat Accounts – December 18th (Updated on December 18th)
Trading in FPO Shares Begins From – December 19th (Updated on December 18th)
Dear Sir,
I applied for 450 shares through demat account. I got the refund for 150 shares but am not able to see the shares in my demat account yet. Please letme know should I wait or contact my demat account customer care.
Regards,
Vivek
Dear Vivek,
First, you check your allotment status from this link:
http://mis.karvycomputershare.com/ipo/
As you mentioned you applied for 450 shares, you must have got allotted 276 shares and you should get a refund for the remaining shares.
If you find from the above link that you have been allotted FPO shares, but still you are not able to locate these shares in your demat account, then you should contact your broker first and then the Registrar of the issue, Karvy Computershare.
Power Grid FPO shares are permitted to trade on the stock exchanges (both NSE & BSE) with effect from tomorrow, December 19th.
Source: http://www.bseindia.com/markets/MarketInfo/DispNewNoticesCirculars.aspx?page=20131218-11
“POWER GRID CORPORATION OF INDIA LIMITED – EQ LISTING/TRADING APPROVAL AWAITED” This is what I can see in my Demat holdings.
That’s right. Thanks for sharing this info Shashwat !!
I have updated the share allotment against shares applied figures above in the post itself.
Dear Shivji
When is the new shares be traded in Stock exchange ?
Whether any permission is required from BSE/NSE for allowing trading of new shares allowed in FPO ?
Can we sell the shares allotted in Fpo today ?
Dear Anand,
Power Grid FPO shares are yet to get admitted for trading on the stock exchanges. Yes, the necessary permission is required from the stock exchanges for these shares to get admitted and start trading.
Officially, you are not allowed to sell these shares as yet. I think these shares will start trading on the exchanges either from tomorrow or day after.
Why is FPO listed as a separate entity? Wont they just increase the current # of listed shares of Power Grid?
It is not any separate entity Harineem. Only the additional FPO shares need the necessary permission to start trading.
shares of powergrid allotted to all applicants then now who will buy these from market and why not applied and now shares should be held for long term or short term as per past not good experience.
I think initially there will be more sellers than buyers. But, this stock has some value in it and I think it is going to give 30-50% returns in the next 1-2 years.
23rd November, 2010… Same company, same price FPO. Almost 3 years to the day and 0% returns (excluding the meager dividend payout). Can you give some reasons to justify your expectation of a 30-50% returns considering that the company debt has almost doubled in the last 3 years, competition has increased, the management has not ruled out another fpo in the next 2 years and the general under performance of the Power Sector in the last 5 years (NTPC, Tata power, Reliance power to name a few)
This FPO money itself is a big reason for me to believe that it is going to give such returns. Not many PSUs are expanding and require money for their Capex. This FPO money is going to help the company in reducing its debt levels. Fundamentally, the company is not bad and also, there is less competition in the transmission sector than it is there in the power production and power distribution.
Also, I think past 3-5 years were bad for the power sector. I hope things would get better in the next 2-3 years. Moreover, 30-50% returns require the stock to touch Rs. 111.15 to 128.25. It is not difficult for this stock to do that in the next 1-2 years.
Powergrid share allotment is not fair. It was fair for company to allot shares to all applicants on proportionate basis. Why 150 0ut of 150 shares applied in ratio of 1: 1 . 715 shares allotted against 1500 shares applied.
I think it is not unfair Jitendra. After 150 shares (1 lot) got allotted against each application, remaining shares were allotted on a proportionate basis i.e. 63 or 62 shares against every 150 additional shares applied.
This method has been adopted so that every applicant gets at least some shares against his/her application and minimum allotment is 1 lot.
Power Grid FPO Share Allotment against Shares Applied:
150 Shares Allotted – 150 Shares Applied
213 Shares Allotted – 300 Shares Applied
276 Shares Allotted – 450 Shares Applied
338 Shares Allotted – 600 Shares Applied
401 Shares Allotted – 750 Shares Applied
464 Shares Allotted – 900 Shares Applied
527 Shares Allotted – 1,050 Shares Applied
589 Shares Allotted – 1,200 Shares Applied
652 Shares Allotted – 1,350 Shares Applied
715 Shares Allotted – 1,500 Shares Applied
778 Shares Allotted – 1,650 Shares Applied
841 Shares Allotted – 1,800 Shares Applied
903 Shares Allotted – 1,950 Shares Applied
966 Shares Allotted – 2,100 Shares Applied
1,029 Shares Allotted – 2,250 Shares Applied
Minimum 150 shares allotted against every valid application of 150 shares or more. Additional 62 or 63 shares allotted for every 150 additional shares applied.
Is there a formula to calculate this, or does it vary from case to case basis?
This info that you have posted has been available in the public domain for the last 2 days. Any reason you shared it so late? Or you only post info after 100% verification from authentic sources and don’t like if anyone (Mr. Vivek!) posts rumors?
Basis of this Allotment is – The company was required to allot at least one lot of 150 shares to every retail investor investing less than Rs. 2 lakh. After one lot got allotted against each application, remaining shares were allotted on a proportionate basis i.e. 62 or 63 shares against 150 additional shares applied.
I shared it so late as the info was not made official. I could have shared it earlier as well, but Vivek had already shared it before I could do that.
I’ve no issues if somebody wants to share rumors as well, but then it is better to mention that the info has been shared by some reliable source or the info is yet to get confirmed. I myself share rumors so many times, but then I make it clear in the comment itself that it is yet to get confirmed.
Hi Shiv!
For tax purposes of calculating STCG/LTCG, what will be considered as the “deemed date of allotment” for these shares?
Hi Simple,
Though the Deemed Date of Allotment will be mentioned in the Allotment Advice, I think it should be either December 18th or December 19th. But, I am not 100% sure about it.
Hi Amritesh,
The shares are already listed in the market. The price will get settled where demand & supply get evened out. FPO shares will get listed on December 19th or 20th in the market.
Hi, I got this detail from Karvy.
Application No. 70000421
Name KUMAR AMRITESH
Shares Applied 150
Shares Alloted 150
Congratulations! You have been alloted 150 shares against your application.
When and at what price will the sahres be open to the market.
i got 966 against application of 2100. Its there on karvey website
That’s Great !!
why was my post deleted?
Hi Vivek,
Your comment never got deleted, it was under moderation.
Those who applied for 2250 shares will get 1029 shares by 18th. Refund will be credited by 17th
Thanks Vivek for sharing this info. Has the Basis of Allotment got announced ??
This is just a rumor I heard from a very reliable source so I posted it
It would have been better had you stated the same thing in your first comment. But, that’s perfectly fine Vivek, no issues. Thanks.
No need to be rude Mr Shiv Kukreja. I will not be visiting this site again. There are other better sites than this one
I did not mean what you are thinking Vivek. I did not want anybody to get confused based on some unconfirmed info. Visiting this site or not is completely your decision, but you are still most welcome !!
This is absolutely true. I applied for 2250 shares through ICICI direct (ASBA). Rs 87979.50 got deducted from my account today. At Rs 85.5 per share this is exactly equal to 1029 shares.
We can check the application status thro the below link.
http://mis.karvycomputershare.com/ipo/
Thanks Sailesh & Anand for sharing this info & the link !!
Hi,
I agree with Ram. Posts done by Shiv are very informative and it helps all of us to learn as well as make educated decisions.
regards,
–Kishor
Aditya … Please stop coming to this site. Shiv — we are in support of you.
Power Grid FPO issue price fixed at Rs. 90 per share
http://www.bseindia.com/corporates/anndet_new.aspx?newsid=0C6B3D69-4E13-415E-AB99-DC0A93BE341E&flag=C&type=A&scrip_CD=532898
You should give a full disclosure to how many shares you have applied for personally and for your family. You should also do the same for the Bonds & NCD’s
Hi Aditya, I don’t think I am required to do that.
Then on what basis you “advice/recommend” people to invest or not to invest in a particular issue. You might simply be promoting a particular issue for your own personal gains and misleading people. SEBI guidelines clearly mandate full disclosure for “analysts” like you.
I am reporting this site to SEBI.
Think in this entire post there is no recommendation or advise to subscribe or not to subscribe to this issue. This contains only factual data which is beneficial to all.
I thank and congratulate Shivji for his help to post this article.
Sure Aditya, you are most welcome to do that !!
Am responding to this only because the tone and tenor of this comment seems a bit off-key. As a frequent visitor to this page, I have come to believe that this is a very unbiased and helpful platform for people to make sense of bonds and the like, and possibly take informed decisions in applying for or buying such instruments. An objective analysis of the various posts here is likely to convince Mr. Aditya that there is no merit in his accusations.
EGoM to meet on December 10 to decide Power Grid issue price.
http://www.moneycontrol.com/news/market-news/egom-to-meetdec-10-to-decide-power-grid-issue-price_1004502.html
Except retail category, other categories wld b Max 3000. That leaves as with 386000 in retail category who had subscribed to 2.17 times in retail. Or average 1600 shares for each retail application which doesn’t look reasonable. Anyways if u hv the reliable source pl do check this aspect. Thanks
I’ll share the Basis of Allotment here on this post.
Shivji,
The no. of retail applications which you have said seems to be close to perfect. Please read the below link where Kotak has said Powergrid fpo has received close to 4 lakh applications. Incidentally, Kotak is one of the book running lead managers to this issue.
http://www.moneycontrol.com/news/market-outlook/power-grid-fpo-great-egwhat-right-pricing-does-kotak_1006450.html
That’s great Mr. Anand !! I hope now I am not required to search for a reliable source ??
What is the source of information on number of bids received by stock exchanges during the offer period. the above blog says it is 389142. what is the source of this information ?
Hi Anand,
It is a source based info shared by one of the leading brokers. Also, it is an approximate figure. You’ll get to know the exact numbers of bids once the Basis of Allotment gets shared with the general public.
Thanks Shivji.. This number looks very low considering the size of the issue and euphoria sorrounding it.. Also, the number of shares allotted for each category (specially 2250 category) would depend on this number and hence this is very critical.
It is not a very low number Mr. Anand. This number includes all kind of investors – FIIs, mutual funds, insurance companies, individual investors, HNIs, trusts, HUFs etc. These 3,89,142 investors have applied for 5,30,12,95,500 shares, translating into 47,712 crore worth of investment.