GVK opens at 13% premium

GVK Power and Infrastructure opened on the Bombay Stock Exchange (BSE) at a premium of 12.9 per cent at Rs 350 and on the National Stock Exchange (NSE) at Rs 376.

The stock fluctuated between a low of Rs 304.55 and a high of Rs 400 on BSE before closing at RS 315.55 . The stock touched a high of RS 388 on NSE before closing at 311.30. About 1.03 crore shares were traded on the BSE while on NSE 1.6 crore shares were traded.

"The issue is fairly priced based on consolidated earnings. The GVK has investment in power sector through subsidiaries which are going to have assured earnings based on 14 per cent Return on Equity (ROE) for next few years. The budget is likely to have a positive impact on the power sector." said Nalin Bhatt of Angel Broking.

The proceeds of the issue will go towards equity investment in Gautami Power Plant and for repayment of bridge finance for funding the equity. It would increase the company's stake in GPL to 51 per cent from 47.17 per cent.

The issue was subscribed 20 times over.

"The issue was expected to open at Rs 185. For the short-term the stock is expected to trade at above Rs 350. Concessions are expected in the power sector in the Union budget which will have a positive impact. Although the stock slipped during the day's trade the company is good as the management of the company is good," said a broker.