Thursday, August 20, 2009

Adani Power Trading Strategy from Experts

A power project development company Adani Power promoted by Adani Enterprises will list its equity shares on the bourses on August 20, 2009. The company has fixed the issue price at Rs 100 per equity share for its initial public offering of 301,652,031 equity shares of Rs 10 each.

Experts told that the stock will list with 10-15% premium and will maintain its issue price in the near term.

RS Iyer of KR Choksey Securities says Adani Power will list around Rs 110-120 and may go upto Rs 130 a share. "It will stay above the issue price throughout the day." But one will get the stock below Rs 100 in near term.

Manish Bhatt of Prabhudas Lilladher, says Adani Power will see 12-15% premium over issue price on listing, after looking at the subscription of 39 times on the QIBs front. "The stock may see at least 25-30% premium during the day." He added that one could buy the stock at Rs 80-90, which would be the best price to buy.

Investment Advisor, SP Tulsian said the grey market premium for Adani Power was at Rs 7. It will list around Rs 110. The outlook for the stock will be positive in the near term and it can touch Rs 120-125 in three-month's time.

Avinash Gorakshkar, Head-Research, Reliance Money, says Adani Power may list around Rs 110-115. "The grey market premium was around Rs 9." For infrastructure companies, he feels, it is difficult to predict the target price. But he was quick to add that the stock can maintain above its issue price.

For the non-institutional investors, he sees the break even price at about Rs 120 and more. "They will try to cover their interest cost on the first day. The breakeven price varies because the allotment of shares differs from person to person."

In an interview with CNBC-TV18, Ambareesh Baliga of Karvy Stock Broking said, "Adani would come closer to its issue price. So the investors who are hoping for a killing may not really make it on Adani Power."

The issue was subscribed 21.64 times. The company raised Rs 3,016.52 crore via this IPO. It intends to utilize the net proceeds of the issue to part finance the construction and development of Mundra Phase IV Power project for 1,980 MW and fund equity contribution in its subsidiary, Adani Power Maharashtra Limited, to part finance the construction and development cost of power project for 1,980 MW at Tiroda, Maharashtra.

The net issue constituted 13.47% of the post-issue paid-up equity share capital of the company.