Angel has 'Neutral' view on Orient Green Power IPO
The IPO is available at a premium to its private sector peer Indowind Energy which has lesser operational assets, the report says.
By ET Bureau |
MUMBAI: Angel Broking has a ‘Neutral’ view on the initial public offer of Orient Green Power. The IPO is available at a premium to its private sector peer Indowind Energy which has lesser operational assets, the report says.
“The renewable energy sector is set for healthy growth due to its vast unexplored potential and supportive government policies. Leader OGPL has also charted out aggressive expansion plans to capitalise on the emerging opportunities in this nascent but growing industry.
At the lower and upper price bands OGPL is available at implied P/BV of 1.7x – 1.9x on FY2012E financials, which we believe is fair considering higher RoE’s of its business and the risks associated with lower PLFs. The IPO is available at a premium to its private sector peer Indowind Energy (1.3x FY2012E P/BV), which has lesser operational assets at 44MW.
For OGPL, the EV/MW works out to Rs 6.3 crore and Rs 6 crore on FY2012E capacity at both ends of the price band, which is at 10% and 7% premium to its replacement cost, which limits further upside considering the return ratios. Hence, we recommend a Neutral view on the IPO,” the report said.
The company has entered the capital market to raise Rs 900 crore by issuing shares in the price band of Rs 47-55 per share.
The proceeds will be used to finance construction and development of four biomass projects, construction and development of a biomass and wind project by subsidiaries and repayment and prepayment of debt by subsidiaries.
“The renewable energy sector is set for healthy growth due to its vast unexplored potential and supportive government policies. Leader OGPL has also charted out aggressive expansion plans to capitalise on the emerging opportunities in this nascent but growing industry.
At the lower and upper price bands OGPL is available at implied P/BV of 1.7x – 1.9x on FY2012E financials, which we believe is fair considering higher RoE’s of its business and the risks associated with lower PLFs. The IPO is available at a premium to its private sector peer Indowind Energy (1.3x FY2012E P/BV), which has lesser operational assets at 44MW.
For OGPL, the EV/MW works out to Rs 6.3 crore and Rs 6 crore on FY2012E capacity at both ends of the price band, which is at 10% and 7% premium to its replacement cost, which limits further upside considering the return ratios. Hence, we recommend a Neutral view on the IPO,” the report said.
The company has entered the capital market to raise Rs 900 crore by issuing shares in the price band of Rs 47-55 per share.
The proceeds will be used to finance construction and development of four biomass projects, construction and development of a biomass and wind project by subsidiaries and repayment and prepayment of debt by subsidiaries.
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