The Adani Group founded in 1988 has emerged from a trading house into a diversified business group generating revenues of over Rs. 196,097.10 million (2008). One of its very many interests- the power sector, saw the phenomenal growth of its flagship company Adani Power into becoming the largest power trading company in India in recent trends.
Adani Power Limited (APL), is planning to launch its initial public offering (IPO) on July 21 at a price of Rs 130 per share to collect over INR 2200 Crores. Its parent company Adani Group currently holds over 85 per cent stake in Adani Power and after the public issue the promoter stake is expected to decrease to 73 per cent.
Adani Power Limited has a strong presence in:
- Power Generation, Transmission and Trading
- Coal Mining (India and Indonesia)
- Coal Trading
Currently APL has 4 thermal power plants in varied developmental stages – the Mundra Phase 1& 2, Mundra Phase 3, Mundra Phase 4 and Tiroda power project. The funds raised from this IPO is expected to be used to part-fund the Mundra Phase 4 and Tiroda projects.
APL has also filed an SEZ application for all the coal projects to enjoy tax benefits. Analyzing APL- its location in the western region is apt for distribution and is in the fast industrializing areas of Maharashtra and Gujarat. Its parent company Adani Group is one of the largest producers and traders of coal which will ensure availability of raw materials as and when required for APL. Furthermore India suffers from power shortage coupled with the deregulation in power sector leads to an opportunity that will be enjoyed by private players and APL has the surety of increasing demand for its product.
Not without risks, yet APL‘s IPO is the largest in the recent times since the stock market recovery from last year’s fall but still cautious is my verdict.