Hydro power generator Satluj Jal Vidyut Nigam (SJVN) is coming out with an initial public offering (IPO) of 41.5 crore equity shares on April 29, 2010. The offer will close on May 3, 2010. The price band for this issue is expected to be around Rs 30 per share, reports CNBC-TV18 quoting sources.
The offer comprises a net offer to the public of 411,650,000 equity shares and a reservation of 3,350,000 equity shares for purchase by eligible employees at the offer price. The offer shall constitute 10.03% of the paid-up equity capital of company.
The shareholding stake of President of India, acting through the Ministry of Power, Government of India will be reduced to 64.47% from 74.50% post issue. The Governor, State of Himachal Pradesh holds 25.50% stake in the company.
Issue Details
| Issue opens | 29 Apr 10 |
| Issue closes | 3 May 10 |
| Issue Size | 415,000,000 equity shares. |
| Face Value | Rs. 10/- |
| Price Range | Rs.23 to Rs 26. |
| Market Lot | 250 equity shares |
| Minimum Order Quantity | 250 equity shares |
| Maximum Subscription Amount for Retail Investor | 100000 |
| IPO Grading | IPO Grade 4/5 |
| Rating Agency | CARE |
Note : Retail investors will get shares at 5% discount to offer price.
Overview
SJVN is a hydroelectric power generation company originally established as a joint venture between the Government and the state government of Himachal Pradesh to develop and operate the NJHPS. Based on information published by the CEA, the NJHPS is currently the largest operational hydroelectric power generation facility in India based on installed capacity, with an aggregate generation capacity of 1,500 MW, and is located on the Sutlej River in the state of Himachal Pradesh.
They are currently constructing the Rampur Project, which is expected to be a 412 MW hydroelectric power generation facility located downstream from the NJHPS. The Rampur Project is currently projected to be completed and commissioned in 2013.
Also been awarded the rights to develop and operate two hydroelectric projects with an expected aggregate generation capacity of 825 MW by the state government of Himachal Pradesh (in each of which we are expected to have a 51% participation interest).
It is this value system that SJVN has carried to its next big project, the 412 mw Rampur Hydro Electric Project (RHEP), which is a run of the river project and will use the tail race waters of the NJHEP. Construction for RHEP, located in Shimla district, has commenced and the project is expected to be commissioned by 2012.
In the 12th Five Yesr Plan, SJVN will also complete the Luhri Hydro Electric Projects in Himachal Pradesh and the Devsari, Naitwar Mori and Jakhol Sankri Hydro Electric Projects in Uttaranchal. A project in Sikkim is in the pipeline. By the end of the 11th plan, SJVN aims to be a 4, 000 mw company.
Through its various projects, they are expected to increase total installed power generation capacity by approximately 3,588 MW.
Projects
The following table sets forth a summary of projects under operation, construction, development and implementation:
| Project | State/Country | Installed Capacity (Actual/Anticipated) | |
| Operational project | |||
| NJHPS | Himachal Pradesh, India | 1,500 MW | |
| Project under construction | |||
| Rampur | Himachal Pradesh, India | 412 MW | |
| Projects under development / implementation | |||
| Luhri | Himachal Pradesh, India | 775 MW | |
| Dhaulasidh | Himachal Pradesh, India | 50 MW(3) | |
| Devsari | Uttarakhand, India | 252 MW | |
| Naitwar Mori | Uttarakhand, India | 60 MW | |
| Jakhol Sankri | Uttarakhand, India | 51 MW | |
| Arun-III | Nepal | 900 MW | |
| Tipaimukh | Manipur, India | 1,500 MW | |
| Others | |||
| Transmission JV | Nepal/India | N.A. |
Objects of the issue
The purpose of the offer is to achieve the benefits of listing on the stock exchanges and company will not receive any proceeds from the offer.
Competitive Strengths
1. Experienced in the development, execution and management of mega-hydroelectric projects through our development and operation of the 1,500 MW NJHPS, which is the largest hydroelectric power generation facility in India based on generation capacity.
2. Since the commissioning of the NJHPS, consistently met or exceeded Government-set performance targets for our operations, and have been upgraded to a Schedule A public sector undertaking and designated as a Mini-Ratna Category-I public sector undertaking in recognition of our efforts.
3. Stable revenue stream through long-term power purchase agreements with state electricity boards and distribution licensees. Currently have ten power purchase agreements with state utilities in the Northern region of India.
4. With effect from January 2011, we may be required to sell electricity generated at our new projects through competitive tender processes conducted by distribution licensees for long term procurement of power.
5. Strong cash position to support project development and operations.
6. Adding approximately 3,588 MW to our aggregate generation capacity through the development of existing pipeline of projects.
2. Since the commissioning of the NJHPS, consistently met or exceeded Government-set performance targets for our operations, and have been upgraded to a Schedule A public sector undertaking and designated as a Mini-Ratna Category-I public sector undertaking in recognition of our efforts.
3. Stable revenue stream through long-term power purchase agreements with state electricity boards and distribution licensees. Currently have ten power purchase agreements with state utilities in the Northern region of India.
4. With effect from January 2011, we may be required to sell electricity generated at our new projects through competitive tender processes conducted by distribution licensees for long term procurement of power.
5. Strong cash position to support project development and operations.
6. Adding approximately 3,588 MW to our aggregate generation capacity through the development of existing pipeline of projects.
1. Financial performance is dependent on the NJHPS (located in the state of Himachal Pradesh on the Sutlej River), which is the only operational project,
2. Sales of electricity are regulated by directives issued by the Government and are subject to prevailing tariff policies and regulations.
2. Sales of electricity are regulated by directives issued by the Government and are subject to prevailing tariff policies and regulations.
Financial Highlights
For the period of nine months ended of December 2009, it has reported net profit of Rs 775.37 crore on total income of Rs 1,510 crore; it has debt of Rs 1,769.90 crore on its books.
| Key Ratios | For the Nine months ended Dec, 2009 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Earning Per Share (Rs.) | 1.89 | 1.85 | 1.74 | 1.58 | 1.42 | 1.45 |
| Return on Net Worth (%) | 11.47% | 12.50% | 12.60% | 12.36% | 11.99% | 13.17% |
| Net Assets Value per Share (Rs.) | 16.45 | 14.79 | 13.85 | 12.8 | 11.88 | 10.9 |
| Power Generation Industry P/E | |
| Highest | 317.3 |
| Lowest | 11.2 |
| Industry Composite | 21.2 |
Comparison with Industry Peers
| Name of the Company | Face Value (Rs) | EPS(Rs) | RONW% For Fiscal 2009 | Book Value as on March 31, 2009 | PE Multiple |
| SJVN Limite | 10 | 1.85 | 12.50 | 14.79 | * |
| JP Power Ven | 10 | 0.60 | 13.60 | 12.80 | - |
| KSK Energy Ven. | 10 | 1.80 | 5.20 | 66.10 | 137.7 |
| NHPC | 10 | 0.80 | 6.10 | 17.90 | 23.5 |
| Company, FY 09 | Long Term Debt (Rs Mn) | Equity | Debt Equity ratio |
| SJVNL | 17,463.70 | 4540.56 | 0.26:1 |
| JP Power Ventures* | 7,411.7 | 10,751.5 | 0.69:1 |
| KSK Energy Ventures, (consl.) | 20,375.7 | 19,821.2 | 0.46:1 |
| NHPC | 82,123.8 | 179,806.2 | 0.46:1 |
| Average | 0.72:1 |
IPO Grading
CARE has assigned "GRADE IPO Grade 4", which indicates above average fundamentals.
Valuation and Verdict
Empowered Group of Ministers (EGoM) has fixed IPO price band at Rs 23-26 per share, reports CNBC-TV18. On this price band PE ratio comes 12.43 to 14.05, which looks attractive.
Posts
