The total issue of 30.16 crore equity shares is aimed at raising Rs2,715 crore to Rs3,016 crore (depending on the price band of Rs90-100 per share).
Of the total issue the company is expected to deploy Rs2,193 crore for funding its projects while the balance would be utilised for general corporate purposes.
After the issue the total number of shares of the company will increase from 187.9 crore to 218 crore, bringing down the promoter group’s stake to 73.5% of the diluted equity.
On DCF basis, the issue seems to be fairly priced while on market cap/MW basis the valuations are in line with the valuations of the peers.
Qualitatively, APL has advantages in terms of its presence in power deficient areas and its status as an integrated player (with AEL and MPSEZL).
Consequently, APL is a good option for investors with a long-term perspective. However, the issue may not provide significant listing gains.
On the upside, the key risks to our valuations are a better than expected PLF and a better than expected merchant power rate.
However, on the downside, timely execution and the dependence on power equipment from the Chinese manufacturers could pose a risk to the valuations.
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