Mumbai: Analysts are optimistic about the IPO of the Rs1,000-crore Indian Energy Exchange Ltd (IEX) on Monday, with several mid- and long-term subscription recommendations. IEX and Power Exchange India Ltd are two energy exchanges that facilitate the trade of energy in the short term. IEX dominates the market, with a share of more than 93.5% of the total volume traded in the last five years.
IEX, the largest energy market in India, traded its shares at Rs1,645-1,650. At the upper end of this price range, the initial sale of securities of the company to Rs5,000 crore. The company announced a profit of Rs11.6.6 crore in 2016-17, up 13% from a year ago. The IPO evaluates the company to 44 times its results for fiscal year 2017. In a note dated October 5, the brokerage firm Prabhudas Lilladher Pvt. Ltd. said it believes that energy trading is at an early stage in India with only 3% of the exchange traded volume compared to about 30-50% in developed countries.
“The high rate of return, strong liquidity generation and strong industry momentum make the IEX an attractive investment candidate for medium- and long-term earnings. We believe that stocks could offer a CAGR of 12 to 15% combined annual growth rate “), analysts said, while recommending a” subscription “to the IEX’s IPO with a medium and long-term outlook Others agreed that the company was attractive.
“The growth in energy trading activity could increase by about 20% per year in billing, but this type of growth is difficult to obtain for the stock market,” said Arun Kejriwal, director of Kejriwal Research and Investment Services. “With open access being a recent concept, demand for this type of service will only increase, not to the extent that it is unique in itself.” Said Kejriwal.
“Foreign investors consider these companies in India to be very attractive, and this is a good subject to subscribe,” added Kejriwal. Others were also optimistic, although they felt that the IEX IPO was fully appreciated. “Given the dominant market share, sound finances, stable growth, the IPO could attract interest in the current market environment,” Centrum Broking Ltd said in a note on October 4. “Accordingly, we believe that, despite fair valuation, the price of the offer could be even higher than the price of the offer,” added Centrum analysts.
The IPO IEX is a pure offer for sale where existing investors will sell about 6.06 million shares. Tata Power Co. Ltd. plans to completely leave the company. Tata Power will sell its total of 1.25 million shares, which at the upper end of the price range will increase Rs206 crore. The company will not receive any money from the offer. The objectives of the offer are to realize the benefits of the quote to improve the company’s brand and provide liquidity to existing shareholders, IEX said in its draft memorandum.