India's largest thermal power production company, NTPC's FPO (follow on public issue), which has opened for subscription, has been subscribed 0.7 times so far, reports CNBC-TV18.
The qualified institutional investors (QIB) book was fully subscribed. Most bids came in at Rs 209 per share on NSE as against floor price of Rs 201 per share.
Sources told CNBC-TV18 that SBI and LIC have put in Rs 4,760 crore in NTPC FPO.
While talking to Moneycontrol.com, experts and brokerge houses advised investors to subscribe to the issue. However, only Investment Advisor, SP Tulsian said one should skip the issue.
"With this floor price, response is likely to be lukewarm in non-QIB category which will spoil the party going ahead for PSU divestment, especially via FPOs. Considering all this, it is advised to skip the issue, looking at the volatility in the secondary market chances of price shipping below floor price is quite high. It is better to buy the stock from the secondary market, when it slips below Rs 200, instead of considering FPO," he said.
However, Manish Bhatt of Prabhudas Lilladher advised investors to subscribe to the issue. "The issue looks to be good. If one holds the stock with one-year plus horizon, will get 30% return at least," he said.
In an interview with CNBC-TV18, R Venkat Subramanian, CIO, Infina Finance said for large investors who were looking for deploying significant amount of cash at one go, this price now became more attractive. "It's an opportunity for large institutions who want some exposure in that area. It's reasonable to assume that it would get it done in the range of Rs 200-220 and that is a reasonable long-term entry point for large institutional investors to buy that stock. It is not something that is going to give you large returns in the short-term. But for large investors looking for deploying significant amount of cash at one go, this price now becomes more attractive than what we were earlier talking about."
Reliance Money, in its report, said, "At the floor price of Rs 201, NTPC is priced at 2.6x of price to book value. Post dilution the ROE stands at 12.3%, better than its listed peers. Nevertheless, in view of its impressive track record, merchant power capacity addition and prolific avenues of nuclear power generation augers well for the company going ahead, hence we recommend investors to subscribe to the issue."
"NTPC – The India’s largest Thermal Power Production Company is also Nav-Ratna company conferred by Govt. of India (GOI). The company is coming out with FPO at a price of Rs 201 (LTP on Feb. 2, 2009 - Rs. 206) to meet GOI’s divestment decision. The stock is recommended for portfolio with long-term perspective and target of Rs 250-275 in next 12-15 months when compared to its Industry peers," said Swastika Investmart.
About the issue
The employees will get the shares at Rs 191/share, a discount of Rs 10/share to floor price. Of the FPO, a total of 4,273,220 equity shares are reserved for NTPC employees.
The minimum bidding lot is of 28 shares and in multiples of 28 shares thereafter.
The offer marks a divestment of 5% in NTPC by the President of India acting through the Ministry of Power. Prior to this Offer, the GoI owned approximately 89.5% of NTPC’s Equity Share capital.
ICICI Securities Limited, Citigroup Global Markets India Private Limited, JP Morgan India Private Limited and Kotak Mahindra Capital Company Limited are the book running lead managers to the Offer and Karvy Computer Share Private Limited is the Registrar.
Source: Moneycontrol.comCourtesy moneycontrol.com
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