JSW Energy IPO price band at Rs 100-115

fter 15 years, the Jindal Group is going public again. It aims to raise Rs 2,700 crore for its energy business, JSW Energy. Incorporated in 1994, JSW Energy has a current generation capacity of 995 mw and is targeting about 11,000 mw by 2015.

With this issue, JSW Energy will be the fourth power generation company this year to enter the capital market after state-run NHPC, Adani Power and Indiabulls Power, which are currently trading below the issue price.

JSW on Thursday announced the price band of its IPO — between Rs 100-115 per equity share. The issue opens on December 7 and closes on December 10.

Already, there are concerns if the IPO will sail through, especially when the stock market performance of recent power sector IPOs was disappointing. Many experts believe that they were overpriced. Adani Power had raised Rs 3,020 crore and Indiabulls Power raised Rs 1,700 crore in recent IPOs.

However, industry analysts believe the JSW Energy IPO is better placed as it is not over-priced in the current scenario and the company is also better placed. Says Nishna Biyani, an analyst with Prabhudas Lilladher, "With the current price band, the JSW Energy IPO is better placed. The company's projects are new, with 995 mw up and running, and it is getting a variable cost of Rs 1.20 to 1.30 per unit for these projects. The company is currently selling power in the short-term market at Rs 5 per unit and is targeting a total capacity generation of 3,140 mw by 2012."

JSW would use the proceeds of the issue for its plans to increase the generation capacity to 11,390 mw by 2015 and also for mining and transmission projects. The company would also use the proceeds to repay its debt of Rs 475 crore. JSW Group's consolidated debt as on September 30 stands at Rs 7,676 crore.

SS Rao, joint managing director and CEO of JSW Energy, said, "The company is currently selling about 55% of the total capacity through merchant sales and 45% through long-term contracts. Subsequently, it will sell about 40% by merchant sales."

The Sajjan Jindal-led company will dilute up to 16.64% equity stake through the issue, 18% of which will be offered to anchor investors, a company official said.

JSW Energy said it would offer a retail discount of Rs 5 to the issue price determined after completion of the book-building process. The company would allocate...