The Anil Agarwal-led Sterlite Power And Transmission  has announced the IPO Subscription Date and plans to raise Rs 1,250 crore from the primary market. Market participants are extremely bullish on the stock for a variety of reasons such as business opportunities rapid electrification of rural areas, railway tracks, push to electric vehicles and focus on renewable energy. It’s a very good turnaround story also.

Sterlite Power And Transmission IPO Review: Should I Buy?

Sterlite Power is the largest company in the project tariff-based competitive bidding (TBCB) route having the highest market share transmission projects. It is the largest private player in the sector with a 26% market share of the transmission projects. In Brazil, it has a 13% market share of transmission projects awarded by the Brazilian government.

The debt on the balance sheet is constantly going down and it is now 2780 crore in 2021 compared to 7000 crores in FY20. The revenues are stable and ROCE is more than 35.

At the current market price in the unlisted market, the market capitalization of Sterlite Power has valued at Rs 8,100 crore, whereas Adani Transmission has a market capitalization of less than 2 lakh crore.

Sterlite Power IPO Date

The IPO subscription is slated to open at [    ] and the issue will close on [            ].

Sterlite Power Transmission IPO Price Band

The face value of each share has been fixed at Rs.2, the price band of the IPO has been fixed [   ]

Sterlite Power Transmission IPO Equity Size

As per the rate of X Equity Shares of Rs.2 each for cash at a price of Rs. [ ]  per equity, the company plans to raise 1250 crore. At the X Equity Shares of Rs.2 each, the issue size has been fixed at Rs 12,500.00 crore

Sterlite Power Transmission GMP (Grey Market Premium)

The dealers seem to be extremely bullish for the home-grown unicorn company Sterlite Power Transmission Initial Public Offering (IPO) and the grey market premium is moving up.

Sterlite Grey Market Premium is around [%] which is [%] more than yesterday premium. The increase in the GMP of Sterlite Power and Transmission share in the grey market is a positive sign.  It is to be noted that the subscription will open on [ ] and it will remain open for bidding.

Though GMP of an IPO is not a solid indicator of the public issue and people would look at the financials of the company. However, this certainly indicates sentiment.

Sterlite Power Transmission IPO Allotment Status

The initial public offering (IPO) of Sterlite Power and transmission received a great response from Investors and the issue has been subscribed [ ] X times during the issue subscription date.

It is to be noted that qualified institutional buyers (QIBs) was has subscribed X times, non-institutional investors has subscribed X times and that of retail individual investors (RIIs) subscribed [X] times as per the latest available data.

Should I Invest in Sterlite Power And Transmission IPO?

As it is clear from the above table, Sterlite Power Transmission has been 68.42 %, whereas Power Grid Corporation is just 17%, Adani Transmission 14, KEI Industries is 15. The IPO money will be utilized to pay the debt of the company.

So, it’s way higher than the listed companies in the space. Also, when Adani Transmission revenue is just 1004 crores which is just 3 times, it’s the market cap is 2 lakh crores, Sterlite Power and Transmission is much lower and there is a huge room to go up.   It is a highly integrated player that offers an entire transmission infrastructure with many areas offering high growth potential.

The ROCE has witnessed a sharp increase of 1.97%, 40.22% and 36.68% for FY19, FY20 and FY21 that reflecting robust profitability and capital efficiency of our business.

Here are some strong Positives of Sterlite Power Transmission Issue

• Leadership position in the Indian power transmission sector, achieved through established processes and technology to identify and execute high margin projects;
• track record of executing complex projects successfully, with the use of technology and innovative solutions;
• Very high ROCE and an efficient capital structure
• Experienced Board and management
• Strong focus on ESG.

Demand and Profitability Drivers for Sterlite Power & Transmission

According to the CRISIL Research expects the eastern and north-eastern regions show higher growth in power demand over fiscals 2021-25 than the other regions. The energy deficit in the north-eastern region is currently 3.7% in fiscal 2020 and is 5.3% in Assam. This indicates high potential for increasing electricity consumption in the region.

Also, there has been strong growth in the transmission system as a result of the increased requirement of the transmission network in order to carry bulk power over longer distances. The segment is currently growing at 7.6 per cent.

Brazil’s power sector is also slated to witness robust growth over the coming decade. Fitch forecasts total electricity capacity will increase from 181.6GW in year-end 2020 to 238.5GW in 2030. This will help Adani Power and Transmission to grow fast.

Is Sterlite Power a Good Company?

It is among the best company in the T&D sector in India. Experienced management and speedy project execution are the key.  As you can see, it has strong financials and great capital allocation efficiency.