Issue open: September 10, 2007
Issue close: September 13, 2007
Price band: Rs 44-52
Business:
Plan, build, operate and maintain the national and international transmission networks.
Business characteristics:
Highly regulated. Remuneration is cost plus 16% ROE. As an incentive the company earns 1% extra ROE for every 1% increase in availability of transmission capacity above the benchmark 95%
Other businesses such as consultancy and telecom networks earned the company 8% of the operational income.
Financials
Sales: Rs 3589 crore FY2006-2007
Net profit: Rs 1220 crore FY2006-2007
Why IPO:
To finance the projects undertaken in the field of transmission
Outlook:
PE: 18 times FY2006-2007 earnings
P/Book: 2
Call:
A no brainer actually.
Invest at the cut off. You may come across listing gains of around 5-7% on this counter. The non core business of telecom and other ancillary activities are expected to pay off once the telecom goes rural.
Disclosure: We intend to bid for this offering with a long term view in mind.
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