Power IPOs - good, bad or ugly?

MUMBAI: Rising deficit will shift the balance in favour of generators. Generators with captive fuel with blend of merchant with PPA can earn 25% RoE on sustained bassis

India needs incremental power capacity of one lakh Mw over the next five years. Peak power deficit in India goes to as high as 18.6%. The onus is on private players to add 40,000 Mw by 2015.

Given the deficit, distributors are forced to buy merchant power over prevailing prices.
Historically, short-term power rates incrase 26% per annum with increasing power deficit…

Upcoming Power IPOs
Company Amount to be raised (Rs crore)
Adani Power 2,200
NHPC 1,680
Sterlite Energy 3,000
Indiabulls Power 1,500

Adani Enterprises: Unlocking Value
Adani Power IPO likely to open on July 28
Proposed IPO for 33.77 crore shares, value at Rs24,180cr
Adani Enterprise hold 83% stake in Adani Power
Post IPO, Adani Enterprise will hold 70.3% stake in Adani Power
Adani Power plans to add 6600 Mw by 2013 & 10,000 Mw by 2016
70% of incremental profit of Adani Enterprise expected from Adani Power
Emerge as among the top five private power generation companies in India
Total estimated cost of all power projects will be Rs 43,139cr
Intend to finance approx 80% of cost of each project
6,600 Mw of power under contruction & 3,300 Mw at planning stage
Regulated:Merchant mix of 72:28 ratio
28% of power sales on merchant at Rs 6.5/unit till FY2015

source: UTVI

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