The follow-on public offer (FPO) of Power Grid Corporation of India was subscribed 9.72 times on Thursday, the last day of subscription for institutional investors.
The institutional investor segment was subscribed over 18.52 times, according to the Bombay Stock Exchange data. The portions reserved for retail and non-institutional investors (NIIs), for which the bidding closes tomorrow, were subscribed 0.72 times and 1.63 times, respectively.
Analysts say strong investor response can be attributed to the issue’s attractive pricing and Coal India’s stellar performance after listing.
| IN DEMAND CATEGORY-WISE SUBSCRIPTION FIGURES ON DAY 3 | |
| Category | in times |
| Institutional | 18.52 |
| Retail | 0.72 |
| NII | 1.63 |
| Source: BSE | |
The price band for the Power Grid issue is Rs 85-90. At the upper band, this translates into more than 10 per cent discount to the stock’s last closing price of Rs 101.20 on BSE. Retail investors and the employees will get additional five per cent discount on the final issue price.
Almost all broking firms have advised their clients to subscribe to the issue. According to Angel Broking, at the upper price band, Power Grid is available at price-to-book value (P/BV) of 1.7 times and price-to-earnings (PE) of 12.2 times on 2011-12 estimates.
“Our fair value works out at Rs 105, implying a target P/BV multiple of two times. We believe the issue is well-priced relative to NTPC, which is available at P/BV of 2.1 times and PE of 16.9 times based on 2011-12 estimates,” Angel Broking analysts Rupesh Sankhe and V Srinivasan said in an FPO note.