IPO Note - Satluj Jal Vidyut Nigam

Satluj Jal Vidyut Nigam (SJVN) is one of the largest operational hydroelectric power generation facility in India based on installed capacity, with an aggregate generation capacity of 1,500 MW, and is located on the Sutlej River in the state of Himachal Pradesh.

The Company has an established track record of operational excellence. Since the commissioning of NJHPS, it has consistently met or exceeded government set performance targets for its operations. It also has experience in the development, execution and management of mega hydroelectric projects through the development and operation of NJHPS. This gives a competitive advantage in developing large hydroelectric power projects, both in India and abroad.

Outlook & Valuation

On post-IPO, the EPS for FY 2009 works out to Rs 1.8. The P/E is 12.5-14.2 times of the offer price band of Rs 23-Rs 26. Inj comparison to its peer NHPC, issue looks attractive. The Price/Book Value (P/BV) of SJVNL is 1.4 – 1.6 times, while that of NHPC is 1.6 times. Hence, keeping in mind its strong fundamentals, growing demand for clean energy and attractive valuations, we recommend “Subscribe” the issue for long term gains.