The Hindu Business Line : NTPC issue sold out in 20 minutes

THE IPO of 10.5 per cent equity in the Government-owned NTPC was sold out within 20 minutes of the issue opening today, merchant banking sources said.

According to data available on the BSE till 8 p.m. on Thursday, investors had placed cumulative bids for 317.89 crore equity shares compared to 86.58 crore equity shares available for subscription.

The second largest Government offering for sale of shares aims to raise around Rs 5,360 crore at the upper price band of Rs 62 per share.

The indicated price range for the offering through 100 per cent book building is Rs 52-62 for the Rs 10 face value share.

The majority of the bids on the first day came from institutional investors, merchant bankers said.

Institutional buyers will be allotted 50 per cent of the shares while retail investors will get 25 per cent of the issue, which closes on October 14.

"The overwhelming response we saw today from the institutional investors was expected, as foreign institutional investors view NTPC as a fundamentally strong company," said Mr S. Mukherji, CEO and Managing Director, I-Sec, lead mangers to the issue.

The response to the NTPC issue boosted the share prices of other power companies. Tata Power closed at Rs 331.30, up by 4.76 per cent, while Neyveli Lignite ended at Rs 64.80, up 4.35 per cent. However, Reliance Energy fell marginally by 0.92 per cent to close at Rs 664.15.

At a price band of Rs 52-62, the NTPC stock is being offered at 11-13 times its earnings while other power companies like Neyveli Lignite are trading around eight times; this is attracting interest in other power company stocks, analysts said.

NTPC hopes to use the money raised from selling these shares for adding six new power generation projects that will increase its total generation capacity by 6,690 MW.

The projects will be funded through a 70:30 debt-equity ratio, according to the offer document. The company currently produces 26.7 per cent of the total power generated in the country.

NTPC's total income for the year ended March 31, 2004 was Rs 25,964 crore. The company recorded a net profit of Rs 5,260 crore.

In today's trading, BSE Sensex gained 59.91 points to close at 5,773.66, while the NSE's S&P CXN Nifty closed at 1,815.70, up 20.8 points.