Indiabulls Power Limited IPO - Rating & Recommendations

Incorporated in 2007, Indiabulls Power Limited is a power project development company. Company develops and intends to operate and maintain power projects in India. The Company is a subsidiary of IBREL (Indiabulls Real Estate), a part of the Indiabulls Group and listed on the BSE and the NSE.

IBREL is one of the largest real estate development companies in India. It focuses on construction and development of properties, project management, investment advisory and construction services.

Issue Open: Oct 12, 2009(Oct 13,2009 Exchange Holiday)
Issue Close: Oct 15, 2009
Price Band: Rs. 40 - Rs. 45 Per Equity Share
Minimum Bid Size: 150 Equity Shares
Issue Size: 339,800,000 Equity Shares of Rs. 10
Issue Size: (Rs Crore) Rs. 1,359.20 - 1,529.10 Crore
Face Value: Rs. 10 Per Equity Share
Issue Type: 100% Book Built Issue IPO
Listing At: BSE, NSE

Maximum Subscription Amount for Retail Investor
Rs.100000

Book Running Lead Managers
Morgan Stanley India Company Private Limited

IPO Grading / Rating
CRISIL has assigned an IPO Grade "3/5" (pronounced "three on five") to Indiabulls Power Ltd IPO. This means as per CRISIL, company has average fundamentals. CRISIL assigns IPO gradings on a scale of 5 to 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals.

One may try to play the issue for IPO listing gains, which might also prove risky. At Rs 40, it can be thought of for investment but definitely not above the price tag of Rs. 40.

Stock brokerage house view:
Prabhudas Lilladher - IPL is looking to add five projects totaling 6615MW of capacity over the next 4-5 years time frame. The first three projects are relatively at advanced stage of implementation with coal linkages/captive mines in place & BTG equipment supply orders to Chinese vendors already awarded for the first 2 projects. Based on our assumptions (as per RHP & management analyst meet interaction), the NAV of current projects works out to Rs 37, with ~60% value accruing due to pit-head captive mine at power projects of Chhattisgarh.

At the higher end of the band, IPL is expected to be valued at 2.1xFY12E to post-issue book value. We value IPL’s 5295MW on DCFE basis at Rs 37 and have given a 25% premium to capture the value of future projects, to arrive at Rs46 per share value. We would recommend Subscribe for listing gains.

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