NHPC IPO – What to do?

The pipes carrying water down to the Bonningto...

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National Hydroelectricity Power Corporation (NHPC) is a hydroelectric power generating company dedicated to the planning, development and implementation of an integrated and efficient network of hydroelectric projects in India. The company carries out all activities related to the development of hydroelectric projects, from the concept stage to the commissioning stage.

The issue of 167.73 crore equity shares (of which 111.82 crore is fresh issue and 55.91 crore is offer for sale by the Government of India [GoI]) is aimed at raising Rs5,032.1 crore to Rs6,038.5 crore (depending on the price band of Rs30-36 per share).

Long term investors who can hold for more than 5 years can invest in this issue. In terms of valuations, the issue is priced between 1.7x-2x post-money book value that is at a discount to the listed utilities in this line of business as the RoE is low compared to its peers. Short term investors who wish to double their money on listing can avoid this issue.

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