Posts Tagged ‘Reliance Power’

CIL sets IPO record; to list on Nov 4

India’s IPO market created history on Thursday with state-owned Coal India share issuer in the becoming the biggest country, beating Reliance Power’s 2008 initial public offering.

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At the time of going to press, the CIL issue was subscribed 15.26 times, collecting Rs 2,36,113.28 crore. The shares will debut on the market on November 4, a day before Muhurat trading that marks Diwali.

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Responding to late rush from retail investors, the company postponed the close of the issue to 9 pm.

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At the upper end of the band, CIL will be the seventh biggest Indian company by market cap, after ONGC, State Bank of India, TCS, Reliance Industries, Infosys Technologies and NTPC, based on Thursday’s closing price. CIL’s Rs 15,474 crore IPO has overtaken Reliance Power’s Rs 11,700 crore issue.

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Buoyant demand from retail and wealthy investors on the final day added to the strong response from institutional buyers. This also signalled success for the government’s upcoming share sales.

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Retail investors, who often take cues from institutions in IPOs, had put in bids for shares 1.44 times or for 28,60,44,375 shares. Retail investors will get a five per cent discount on the final issue price.

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Wealthy individuals had separately bid for 13.89 times the shares available for them.

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Bidding for the mega IPO closed on Wednesday for qualified institutional buyers, including foreign institutional investors, mutual funds and insurance firms. And for the portion reserved for them, the issue was over subscribed by 24.70 times, lead by FIIs.

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The IPO has generated a demand of 493,38,72,050 shares from FIIs. Calculated at the upper end of the price band, this demand is worth Rs 1,20,879.86 crore and at the lower end worth Rs 1,11,012.12 crore. Even at the low end, the demand surpasses the record Rs 1.08 lakh crore pumped in by FIIs into the capital
market.

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India’s largest new issue came amid a flurry of big deals in Asia.

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At the top of its price range, Coal India would be valued at 15.7 times trailing earnings. The issue also got the highest demand for an Indian issue, helped by qualified institutional buyers.

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The demand from QIBs for CIL was at Rs 1,73,398 crore with 100 per cent application amount, compared with Rs 1,88,923 crore with 10 per cent margin for Reliance Power IPO. In case of Reliance Power, the QIB portion was covered 30.68 times.

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“The response to Coal India IPO, from all classes of investors, has surpassed even the most optimistic predictions. It has caught even the biggest optimists by surprise,” SMC Global Securities strategist Jagannadham Thunuguntla said in a note.

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He said the response puts the government on target to achieve its divestment target of Rs 40,000 crore in fiscal 2011 and even exceed it if other issues like the follow-on offering of Power Grid, Steel Authority of India, ONGC, Shipping Corporation of India, Indian Oil Corporation and IPO of Manganese Ore fall in place.

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The government, which has collected Rs 17,500 crore from public issues, including Coal India, may raise its divestment target and get over Rs 58,500 crore, SMC Capital added.

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At the upper end of price range, Coal India issue is worth Rs 15,474 crore and at the lower end it would fetch about Rs 14,211.81 crore.

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The upper band would also give it a market capitalisation of Rs 1.54 lakh crore ($34.7 billion).

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Meanwhile, the broader market recovered from a two-day slump and closed up 1.95 per cent at 20,260.58 points. Now all eyes will be on whether it will be a strong listing on the eve of Diwali.

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Downward Movement Hits Indian Equities Markets

Downward Movement Hits Indian Equities Markets

Downward Movement Hits Indian Equities Markets

Indian equities markets entered into a consolidation zone with analysts terming the downward movement as long expected.

A benchmark index fell 5.44 percent from its last weekly close and ended trade below the 16,000-mark.

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The 30-share sensitive index (Sensex) ended 914.53 points, or 5.44 percent lower, at 15,896.28 points at the weekly close Friday, as opposed to the previous week’s close at 16,810.81 points.

The broader S&P CNX Nifty of the National Stock Exchange (NSE), too slipped, closing at 4,711.7 points, down 5.7 percent from its last weekly close.

However, companies with large-to-medium market capitalization saw greater selling with the BSE midcap index ending 7.36 percent lower and the BSE smallcap index losing 8.01 percent over the last week.

“This consolidation was expected anyways as the valuations were not commensurate with the earnings of corporates. To an extent a correction in valuations was warranted,” said Jagannadham Thunuguntla, equities head of brokerage and capital markets consultancy SMC Capital.

The markets started on a cautious note Monday ahead of the Reserve Bank of India‘s mid-year policy review Tuesday.

The Sensex ended a volatile day at 16,740.50 points — 70.31 points or 0.42 percent lower than Friday’s close.

The Nifty followed a similar trajectory and ended in negative at 4,970.9 points, down 0.52 percent.

Both benchmark indices nosedived Tuesday as the RBI indicated in its policy review that it would start tightening the monetary policy and look at exiting the stimulus measures.

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Data with markets watchdog Securities and Exchange Board of India (SEBI) showed that foreign funds were net sellers during the week, having sold scrips worth $12.8 million.

The top gainers this week on the Sensex were

Tata Motors (up 7.2 percent),
Ranbaxy Labs (up 4.8 percent),
Wipro (up 2.9 percent),
Grasim (up 1.6 percent) and
Hindustan Unilever (up 1 percent).

The top losers were :

DLF (down 18.5 percent),
Reliance Capital (down 14.5 percent),
Reliance Infrastructure (down 14.2 percent),
Hindalco (down 13.9 percent) and
Reliance Power (down 12.9 percent).

“Broadly speaking only about one percent of the quarterly results show a sound top line growth. Profits might have increased, but that is not because of increase in core operations – cost cutting and other income have contributed towards it,” said Thunuguntla.

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Did IPO Grading Fail to Catch the Fancy of Investors??

ipo grade system

The grading system of initial public offers (IPO) is in need of an upgrade, say market participants.

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Two years after it was first introduced by market regulator SEBI, the system has failed to catch the fancy of investors as share price trends of newly listed companies have shown little or no correlation to the grading given by rating agencies.

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“IPOs with grading 4 have shown returns that are much lower than IPOs with grades 1 and 2.
So, this is raising the question whether it is time to look at amendments to the existing structure or maybe SEBI can think of completely scrapping the system,” said Jagannadham T, equity head of SMC Capitals.

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However, one can’t deny the importance of the IPO grading system not only is it beneficial for retail investors who don’t have the time or skills to go through an entire prospectus but it also acts as a deterrent for fly by night promoters who wish to access the primary market solely for their gains.

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Not only financials of a company is looked at but also people at the business head level are contacted to see what the company is up to.

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As per few experts, IPO grading doesn’t have anything to do with the price post listing. A lot of things apart from fundamentals drive the stock.

The reservation of comment on pricing is a sore point, but even more, is the grading of a SEBI barred company like Austral Coke at Grade 2 by CARE above Orbit Corporation at 1 by the same rating agency.

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And this makes one wonder if a thorough due diligence is done by all rating agencies that’s ground enough for a review.

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NHPC IPO subscribed over 16 times :)

NHPC IPO

The issue received bids for over 2,762.99 crore shares against 167.73 crore shares on offer, as per the data available on the National Stock Exchange.

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The initial public offer of hydro power producer NHPC got subscribed over 16 times with most of the bids coming in from institutional investors.

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The offer, which is expected to mobilize up to Rs6,000 crore making it the second largest IPO in the country till date after Reliance Power’s, will close on Wednesday.

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Marketmen said the portion reserved for qualified institutional investors and high networth individuals got subscribed nearly 20 times each, while the retail investors portion was subscribed over three times the shares on offer.

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“The subscription by institutional investors is likely to go up further and the retail participation would also increase towards the end of bid timing,” SMC Capitals equity head Jagannadham Thunuguntla said.

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Analysts said being a public sector firm, NHPC is getting attention from various categories of investors.

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This is the first stake sale by a state-run company in the last one and a half years, after REC raised over Rs 1,600 crore in February.

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The  of the issue has been fixed between Rs 30 -36.

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Adani IPO fully subscribed on day 1 – sources

Adani IPO fully subscribed on day 1 – sources

Adani Power Ltd’s initial public offering worth up to $623 million was fully subscribed within an hour of opening to investors on Tuesday, three sources involved in the deal said.

By 10:36 a.m (0506 GMT) the 301.65 million share offer was subscribed three times, mostly at 100 rupees, or the top end of the price range, said the sources who declined to be named.

The strong response will be encouraging to other Indian companies lining up share sales.

“Institutional money is driving it now. Retail will follow on seeing the tremendous response,” one source said.

The share offer closes on July 31.

On Monday sources said major U.S. funds T Rowe Price and TPG were among anchor investors who bought 52.85 million shares in Adani’s offering.

SMC Capitals Equity Head Jagannadham Thunuguntla who commented before the IPO openings that “Since the Adani Power IPO is being brought about by a big business house, a lot of investors are keeping their money aside to invest in it after the pre-IPO placement garnered a good response”  was proved right.

Indian firms have sold shares worth more than $7.5 billion so far this year, surpassing the full-year total of 2008, helped by a sharp rally in shares and rising foreign fund inflows.

Adani is the first large IPO in more than 18 months. Most share sales this year have been secondary offerings.