Showing posts with label ntpc nhpc. Show all posts
Showing posts with label ntpc nhpc. Show all posts

Wednesday, April 14, 2010

IPO ANALYSIS: SJVNL –REASONABLY PRICED -APPLY








The state-run hydropower generator Satluj Jal Vidyut Nigam Limited (SJVNL) plans to raise about Rs 1,200 crore through IPO by offer for sale of shares.  The company proposes to issue 41, 08, 81,400-equity shares of face value of RS 10 each, in the price band of Rs 23-26. The issue is likely to open on April 29 and close on 03-05-10.  At present, the Himachal Pradesh government holds 25.5 per cent and the rest by the Central government. After the issue, government stake will come down to 90 percent of the total issued and paid up capital of 410, 88,14,000 Equity Shares of Rs. 10 each.

JM Financial Consultants, IDBI Capital Market Services, IDFC – SSKI and SBI Capital Markets Limited are the BRLMs.

BUSINESS


SJVNL is a hydroelectric power generation company, originally established as a joint venture between the Central Government and the state government of Himachal Pradesh to develop and operate the Nathpa Jhakri Power Station. (NJHPS). 

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.

PROJECTS UNDER EXECUTION


SJVNL is constructing a power plant at Rampur, which is expected to be a 412 MW hydroelectric power generation facility located downstream from the NJHPS. The Rampur Project is expected to be completed and commissioned in 2013. The company has 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 with 51% participation interest). SJVNL has also entered into memoranda of understanding with the state government of Uttarakhand for three hydroelectric projects with an expected aggregate generation capacity of 363 MW. The company has further agreed to participate in a joint venture with NHPC and the state government of Manipur for the development and operation of a 1,500 MW hydroelectric power project to be located in Manipur.

SJVNL has diversified the operations to target hydroelectric power projects  outside  India, and have been awarded the rights on BOOT basis, a 900 MW hydroelectric power project to be located in the Sankhuwasabha district of Nepal. Through these projects, the company expects to increase the total installed power generation capacity by approximately 3,588 MW.










FINANCIALS
                                    RS IN CRORES


07
08
09
TOTAL REVENUE
1,476.17
1,468.82
1,634.84

NET PROFIT
649.98
716.94
759.44
EPS
1.58
1.74
1.85
RONW
12.36
12.60
12.50


COMPARISON WITH THE PEERS


FV
EPS
RNOW
BN/NAV
P/E

SJVN Limited               



RS 10

1.85

12.50

14.79

-
JP Power

RS 10

2.70

13.60

21.90

125
KSK Energy

RS 10

1.80

5.20

66.10

129
NHPC               


RS 10

0.90

6.20

17.80

24



STRENGTHS

• Experience in hydroelectric power project development.
• Established track record of operational excellence.
• Stable revenue stream through long-term power purchase agreements with state   electricity boards.
• Strong cash position to support project development and operations. 







RISKS AND CONCERN


  • Primary risks affecting the success of the hydroelectric power projects relates to the land acquisition process.

  • The financial performance is dependent on the NJHPS, which is the only operational project, and is dependent on the NJHPS for the revenues and operating cash flows and to finance the development of the other hydroelectric power projects. 
              
  • SJVNL future success will depends the ability to respond to technological advances in hydropower generation.


  • The development of hydroelectric power projects is capital intensive and typically requires a longer period as compared to other power projects. Any delay in execution will increase the cost, which will have adverse effect on operational efficiency.



 OPPORTUNITIES

The low per capita consumption of electric power in India compared to the world average presents a significant potential for sustainable growth in the demand for electric power in India. There is a very big gap between demand and supply, demand being higher.

Power is an essential requirement for all facets of our life and has been recognized as a basic human need. The socio-economic development of the country depends on the critical infrastructure. The growth of the economy and its global competitiveness hinges on the availability of reliable and quality power at competitive rates. The demand of power in India is enormous and is growing steadily. The vast Indian power market, today offers one of the highest growth opportunities.


VALUATION AND RECOMMENDATIONS


For the half-year ended Sept -09, the company has achieved a turn over of Rs 1134cr and net profit of Rs619cr. The company will report an EPS in excess of Rs 2 for the FY2010. At Rs 23-26, the issue is reasonably priced. SJVNL has a decent track record. INVEST.