Dec 3, 2013 ... Systematix Shares & Stocks (I) Ltd. JK Somani Building, British Hotel Lane, Fort,
Mumbai, India – 400001. Key Details: 02nd Dec, 2013.
Wealth Management
Power Grid Corporation of India Limited (PGCIL) FPO NOTE 02nd Dec, 2013
Key Details: Issue Key Highlights: Price: `85 - `90 Issue Opens: Issue Size: ` 6,689.95Cr - ` 7,083.48Cr Issue Close: Note: Discount of 5% to Retail Individual Bidders and Eligible Employees amount to Rs.4.5/- of the top end of the price band
Particulars
No of No of Sh. at Shares higher at lower %age band price (Cr) band(Cr)
Higher band Amount (`Cr)
Lower band Amount (`Cr)
QIB
39.20
39.20
50%
3,528.24
3332.23
Non-Inst.
11.76
11.76
15%
1,058.47
999.67
Retail
27.44
27.44
35%
2,469.77
2332.56
27.00
25.50
100%
7,083.48
6,689.95
Employees
0.30
0.30
Total Issue
78.71
78.71
Issue Details: Industry
Power Transmission
Capital Structure: Pre Issue Equity Fresh Issue (@FV) Post Issue Equity Capital
`. Crs 4629.73 601.86 5231.59
Issue Structure: Total Offer Offer for Sale Fresh Issue Total Offer Issue Size as % of Total Capital (Post-Issue) Face Value IPO Grade Safety Net Scheme
Crs 78.71 18.52 60.19 15.04% 10 NA NA
*** All Calculations at Cap Price
Issue Route Bid Lot (Shares) Lead Managers
Register Office Registrar Listing
Book Build Issue 150 SBI Capital Markets, Citigroup Global Markets India, ICICI Securities, Kotak Mahindra Capital, UBS Securities India New Delhi Karvy Computershare Pvt Ltd BSE, NSE
Key Investment Details for Retail Investors: Min No. of Shares application 150 by Retail Investor Amount to be paid on the Min. 13,500 Application (`) Cheque to be drawn in favour of: Resident Retail Individual Investors -“Escrow Account – PGCIL Public Offer – R” Non‐Resident Retail Individual Investors -“Escrow Account – PGCIL Public Offer – NR” Employees Reservation Portion -“Escrow Account – PGCIL Public Offer – Eligible Employees” QIBs and Non-Institutional Investors can participate in the Offer only through the ASBA process and Retail Individual Investors and Eligible Employees bidding in the Employee Reservation Portion have the option to participate through the ASBA process.
rd
03 Dec 2013 th 06 Dec 2013
Objects of the Offer: The Offer for Sale: The object of the Offer for Sale is to carry out the disinvestment of 185,189,014 Equity Shares of `.10 each by the Selling Shareholder. The Company will not receive any of the proceeds from the Offer for Sale. The Fresh Issue: The Company intends to utilize the net proceeds of the Offer, i.e., gross proceeds of the Offer less the Offer related expenses and the proceeds of the Offer for Sale (the “Net Proceeds”) for the following objects: i. to meet the capital requirements for the implementation of certain identified transmission projects (“Identified Projects”); ii. General corporate purposes. Business Overview: PGCIL is India’s principal electric power transmission company. The Company is in the 25th year of its existence. As on September 30, 2013 it owned and operated more than 90% of India’s ISTS which, interalia, includes interregional transmission links. At the end of Fiscal 1993, the Company owned and operated 22,228 circuit kilometers of electric transmission lines and 39 substations with a total transformation capacity of 12,201 MVA and as at September 30, 2013, it owned and operated 102,109 circuit kilometers of electrical transmission lines and 172 substations with a total transformation capacity of 172,378 MVA. On a consolidated basis, their gross fixed assets, revenues and net profits have grown from `35,205.6 million, `6,340.6 million and `2,366.1 million respectively in Fiscal 1993 to `823,264.4 million, `137,271.2 million and `43,126.1 million respectively in Fiscal 2013. During this period their employees have grown from 5,820 to 9,347. They have featured in the Platts list of Top 250 Energy Companies of the World since 2009, a study conducted by Platts, a division of the McGraw Hill Companies. Investment Rationale: Leadership position in Indian power transmission sector: PGCIL India’s principal electric power transmission company, owning and operating more than 90% of India’s interstate and inter-regional electric power transmission system (“ISTS”). As at September 30, 2013, it operated a network of 102,109 circuit kilometers of interstate transmission lines, 172 EHV AC and HVDC substations with transformation capacity of 172,378 MVA. PGCIL has been ranked as the fifth fastest growing electric utility in the world by Platts in 2012 on the basis of last three years compounded growth rate for revenues. High operational efficiencies: PGCIL has maintained an average system availability of over 99% for its transmission system since FY02. The trippings per line has gradually reduced to 0.32 in H1FY14 from 0.58 for FY13 and 2.56 in FY09. Since FY94, PGCIL has been rated “Excellent” by GoI on an annual basis as a result of achievement of performance targets. It is implementing construction of a National Transmission Asset Management Centre ("NTAMC") and nine regional transmission asset management centres to oversee the remote operation of most of its substations Attractive tariffs and networks, competitive landscape and business model: Company’s tariffs are determined on a cost plus tariff basis and provide it with a 15.5% return on equity until March 31, 2014. Company also earns additional incentives for the timely commissioning of transmission projects and for maintaining high system availability pursuant to CERC norms. PGCIL has no direct competitors of significant size for transmission business. Strong financial position and cash flow from operations: PGCIL has a strong financial position, which will help finance expansion plans in coming years. As at Sep 30, 2013, debt-equity ratio was 2.6:1. Net cash flow from operating activities was Rs 11459 Cr and Rs 6131 Cr for FY13 and H1FY14. Outlook & Valuation: Consolidated total revenue grew at CAGR of 21.4% to `13164 cr in FY13 from FY10. Consolidate PAT grew at a CAGR of 27.5% to `4313 cr for the above mentioned period. PAT margin as of FY13 is 32.8% as against 28.6% in FY10 on back of improved EBITDA margins and control on costs. At the price of `85-90 the stock is available at 8.6x and 9.1x at the lower and upper price band respectively; to its annualized earnings. We therefore recommend to Subscribe for medium to longterm perspective with retail bidders having 5% discount.
Systematix Shares & Stocks (I) Ltd JK Somani Building, British Hotel Lane, Fort, Mumbai, India – 400001.
PGCIL - FPO
Brief Financials: Power Grid Corporation of India Limited
EBITDA Margin (%)
PAT (Rs.Cr.)
PAT Margin (%)
(Rs.)
7535
87.9%
2280
30.2%
116025
7535
87.9%
2280
30.2%
49052
102060
13164
90.2%
4313
107.9
49955
89765
10440
89.2%
101.8
47131
80194
8612
89.7%
Price (Rs.)
Mcap (Rs.Cr.)
EV (Rs.Cr.)
85.0
39353
113710
90.0
41668
FY13
106.0
FY12 FY11
Companies
Revenue
P/E (x)
ROE (%)
P/BV (x)
9.85
8.6
17.3%
1.4
9.85
9.1
17.3%
1.5
32.8%
8.84
12.0
17.3%
1.9
3303
31.6%
6.78
15.9
14.7%
2.1
2672
31.0%
5.47
18.6
12.5%
2.2
(Rs.Cr.) H1FY13 (Standalone)
EPS
Systematix Shares & Stocks (I) Ltd JK Somani Building, British Hotel Lane, Fort, Mumbai, India – 400001.
