The initial public offer (IPO) of Power Grid Corporation of India Ltd (PGCIL), India?s principal power transmission company and Mini-Ratna Category-1 public sector undertaking, which opened on Monday for public subscription, was oversubscribed 1.07 times on the first day itself. The issue received bids totaling 61.57 crore shares against the issue size of 57.39 crore shares. The price band for the issue has been pegged at between Rs 44 and Rs 52 per equity share of Rs 10 each and the issue closes on September 13.
Meanwhile, most domestic brokerage houses have recommended investors to subscribe to the issue, but with a long-term perspective. A research report from one broking house says that PGCIL has high revenue visibility on account of long-term (five to 25 years) bulk power transmission agreements. These agreements are based on tariff determined by the regulator on a cost plus 14% return on equity basis. This also ensures that the company?s profitability is maintained in the long term.
The offer comprises a fresh issue of up to 38.26 crore equity shares by the company and offer for sale of up to 19.13 equity shares by the President of India acting through the Union power ministry.