Mumbai / New Delhi: Government-owned NHPC Ltd, the hydropower producer that raised Rs6,040 crore in an initial offer, gained on listing on expectations investments in generation will spur demand for utility stocks.
Opening bell: NHPC director (finance) A.B.L. Srivastava (left) and chairman and managing director S.K. Garg at the listing ceremony of the company’s stock in Mumbai on Tuesday. Shashank Parade / PTI
NHPC shares, which reached a high of Rs39.75 during the day, closed 1.94% up at Rs36.70 on the Bombay Stock Exchange (BSE), compared with the Rs36 at which the stock was sold in the initial public offering last month. The BSE benchmark index, the Sensex, lost 0.74% on Tuesday.
Electricity generators, including NHPC and Adani Power Ltd, accelerated share sale plans as Indian equities rebound from a 2008 slump, poised for their best year in six. Investors are betting energy demand will climb as the government invests in electricity generation in a nation where the peak power deficit may rise to 13% in the year ending March.
The company’s growth plans are in place and it’s a steady business, said Abhineet Anand of Antique Stock Broking Ltd, who expects NHPC to trade between Rs35 and Rs40. The stock might appear to be highly priced, but so is the case with other utilities in India.
NHPC, based in Faridabad near New Delhi, offered shares at Rs30-36 apiece and will use part of the funds to build seven hydroelectric projects with a combined capacity of 3,240MW, according to the share sale documents. NHPC sold 1.68 billion shares, including 559.1 million owned by the government, in the initial offer that ended 12 August.
NHPC, India’s biggest hydropower producer, is the first among state-run companies to list this year as the government aims to raise money from asset sales. Oil India Ltd, the second biggest state-run energy explorer, will offer shares at Rs950-1,050 apiece in an initial sale that will open on 7 September. The company may raise as much as Rs2,700 crore by selling 10% of its equity to the public and 1% to employees.
The government is selling shares to raise money as it increases spending on roads, power and aid to the poor. India should aim to raise as much as Rs25,000 crore a year from asset sales, the finance ministry said in a report on 2 July.
Adani Power raised Rs3,020 crore in a sale that ended 31 July.
Utilities, including Tata Power Co. Ltd and Indiabulls Power Ltd, plan to tap appetite for power shares as the government targets the addition of 78,700MW of capacity in the five years ending 2012.
Mumbai-based Indiabulls said on 15 July that it plans an initial public offering that will be managed by Morgan Stanley India Co. Pvt. Ltd.
Other companies waiting to raise funds include New Delhi-based Jindal Steel and Power Ltd, which said it may sell as much as 12% of its power unit this fiscal year, and JSW Steel Ltd.