NTPC float opens today, could see good demand

The NTPC initial public offer opens today and could be a sell-out issue going by the market response.

Many brokerages are said to have issued 'buy' calls to their clients and the initial response from market intermediaries suggests that there is a huge demand from institutional investors for the offer.

Market sources said that the IPO should get a huge response from institutions and high net-worth individuals, with both segments of the IPO getting oversubscribed a couple of times over.

The retail segment will also get a huge response as the price per share is lower, brokers said. IPO margin funding players also indicate a big response for the IPO.

The research head of a foreign brokerage house said, "There seems to be a huge appetite for the float as it is the largest power producer in the country. He added that anyone who wants an exposure to the power sector in India will want NTPC in its portfolio." A good response will augur well for other power scrips also, he added.

Murali Krishnan, director of equity research at Anand Rathi Securities said," The issue is aggressively priced and should get a good response."

He added that given the size of its market cap, post listing, it should get into the benchmark indices, which will make it additionally attractive.

Sandeep Nanda, head of research at Sharekhan, said,"There is a lot growth expected in this sector and the response to the NTPC IPO should be good. Institutional interest should be very high in the IPO considering that similar stories world-wide have received a good response."

The NTPC issue for 86.58 crore equity shares of Rs 10 each opens on Thursday, October 7, and will close on October 14. The IPO has been priced in a band of Rs 52-Rs 62 per share.

At the upper level of the price band, the IPO is expected to raise Rs 5,369 crore, the second largest public offer after TCS, which garnered a record Rs 5,420 crore. This puts NTPC's valuation at Rs 51,135 crore, making it the country's third most-valuable firm after ONGC and Reliance.

Some brokers suggested that the IPO could clock in the highest number of applications received in an IPO in recent times. Referring to the success of the recent ONGC public offer, which attracted a host of dedicated global oil and gas funds, brokers said the NTPC issue will probably see a lot of dedicated power sector funds make an entry into India.

Brokers added that given NTPC's balance sheet size, large domestic as well as foreign institutions will find it impossible not to have a sizeable chunk of the stock in their portfolio.