Adani Power IPO Analysis

Adani Power IPO Analysis

Adani Power has got SEBI clearance for its IPO and the IPO should open towards the third week of July. The IPO of Adani Power should open around July 21.

As a part of the Adani Power IPO, there will be no disinvestment by Adani Enterprises but an issue of 33 crore new shares (337,700,000), with an issue size more than 2500 crore.

Background of Adani Power

Adani Power Limited will be in the business of developing, operating and maintaining power projects in India, in a way; it will be in the same league as NTPC and Reliance Power.

Adani Power is a part of Adani Enterprise Limited, which has revenues of over Rs.196,097.10 million in the last financial year.

Adani Group currently holds over 85 per cent stake in Adani Power and after the public issue the promoter stake will be reduced to 73 per cent. Group’s Mundra port which is a few kilometers away will help in importing coal for the power project.

Current Projects of Adani Power

Adani Power is current executing the following projects under various phases:-

1. Mundra Phase 1 & 2 with a capacity of 1,320 MW. The first phase of 330 MW in each phases are expected to get commissioned by June 2009 and the full project is expected to get commissioned by Feb 2010.

2. Mundra Phase 3 will have a capacity of 1,320 MW, which should be commissioned towards the end of the second quarter of 2011

3. Mundra Phase 4 project with a capacity of 1,980 MW, to be commissioned in part in 2011 and 2012

4. There is another project of Mundra Power by the name Tiroda Power Project which has a capacity of 1,980 MW. Out of these 1900 MW of Tiroda Power Project, 660 MW will be commissioned by July 2011 and the remaining by April 2012

Access to raw materials

Like Cals Refineries, Adani Power would have easy access to coal, the basic raw material for power generation since its parent company, Adani Enterprises has a lot of interest in coal and is a major producer and trader. Upto 45% of coal needs of Adani Power would be fulfilled from domestic linkages of Adani Enterprises and the remaining 55% would be imported from Malayasia.

Usage of funds raised in the Mundra Power IPO

The funds will be utilised for the development of Mundra project as well as the Tiroda power plant in Maharashtra, resulting in generation of 6500 MW of power. The total capex will be around Rs 28,369 crore.

Adani Power IPO Buy or Not

Irrespective of the expert opinion that will come out soon on stock market websites, StockMarketBaba recommends that investors buy into power stocks, as and when they are available at the right price. Investors should certainly do some buying in the Adani Power IPO and keep buying more at better prices.

In a nation as ours with a billion people and little penetration of electricity and low availability to corporates, the next phase of economic growth can happen only with the availability of electricity, and to that effect, Adani Power would be a good stock to buy and then keep accumulating over a few years. However, anyone looking for quick gains should rather look at other Power Stocks which will see action along with the Adani Power listing

StockMarketBaba will track the expert opinion on Adani Power IPO, so keep visiting for an updated commentary on the same.