Power Grid Corporation trades in green as follow-on offer kicks in

MUMBAI: Shares of Power Grid Corporation ( PGC) were marginally in the green as its follow-on public offer ( FPO) began today.

The company has fixed its FPO offer price band at Rs 85-90 per share. The retail investors and PGC employees will be given a discount of 5 percent on the issue price. The issue opens today and closes on December 6 for retail investors. For the institutional investors, the issue ends on December 5.

Brokerages are advising their clients to go ahead and subscribe to the issue.

The company is issuing 78.7 crore equity shares of face value Rs 10 each through the FPO. The Government of India is divesting 4 per cent stake through the sale of shares.

PGC is expecting to raise around Rs 7,000 crore through the FPO. The proceeds will be used to fund the capex plans.

The company is the largest player in transmission of electric power in India. It owns & operates 90 per cent of India’s inter state transmission system.

Nomura expects the stock to rally once the FPO is out of the way.

“Our earnings forecast for PWGR builds-in 13 per cent fresh equity issuance at Rs 93 per share. The stock trades at FY15F 1.3x P/B and 9.7x P/E,” the report said.

“We expect the stock price to rally as the equity overhang passes (FPO concludes) in the first week of December,” the report added

Nomura has maintained Buy rating on the stock with a target price of Rs 129 per share.

Following are recommendations of other brokerages on the stock:

Brokerage	Recommendation	Target price
CLSA	Buy	Rs 125
JP Morgan	Overweight	Rs 110

At 10:30 a.m.; the stock was at Rs 93.75, up 0.37 per cent, on the BSE. It touched a high of Rs 94 and a low of Rs 93.25 in trade today.