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IndiaBulls Power – Review – AVOID – Power in Wrong Hands

October 10, 2009

Before we review the prospects of IndiaBulls Power, we would like to know what is the basis on which SEBI clears these IPOs. Power projects are Long Gestation Projects and not Dot Com Businesses which can start making money immediately [They never made either ;-).

IndiaBulls Power Ltd – IPL IPO Review and Recommendation:
IPL will have a combined installed capacity of 6,615MW in Maharashtra and Chhattisgarh post the completion of these projects with lot more projects in the evaluation stage, all of them expected to go on stream by 2013 / 2014.

IPL has been granted coal linkages by the Ministry of Coal for its Amravati Phase I Power Project and the Nashik Power Project. The company has also received letters of assurances for the supply of coal. IPL has entered into a long-term PPA with Tata Power Trading Company Ltd (TPTCL) for the sale of up to 1,000MW of power proposed to be generated at the Amravati Phase I Power Project.

IPO Details:
Retail Portion of 10.2 crore shares @ Rs 40 to Rs 45 / share
IndiaBulls Promoters have pumped in Money at Rs 10 just just less than 2 years ago and have allotted themselves 1:1 BONUS so effectively Rs 5 / share and now they want Rs 45 / Share from you. On what basis should we invest our hard earned money in this shell Company / project which has no cash flow?

Why should you AVOID IndiaBulls Power Ltd IPO:
The promoters have ABSOLUTELY NO experience in Power Projects and is not a speculative finance business like stock broking in which they are.

All its future earnings are highly sensitive to its ability to complete projects on time.

The estimated costs and funding requirements for projects, other than Amravati Phase I Power Project, have been computed on the basis of management estimates [Management has no Experience in Power projects] and has not been independently appraised by any organization or institution.

We have MORE and MORE Questions than answers and hence my only question is WHY SHOULD I INVEST MY Money in such business ? You can BUY the same stock later during market correction, like Reliance Power Ltd. Don’t tell me we will not see a market correction until 2013 🙂

Sometimes INACTIVITY saves lot of money

Comments

11 Responses to “IndiaBulls Power – Review – AVOID – Power in Wrong Hands”

  1. Rishabh on October 10th, 2009 9:36 PM

    Well Warren Buffet says it is very important not to make mistakes like Indiabulls Power Ltd. If this IPO gets subscribed more than 20 times then I will sell majority of my holdings since this kind of euphoria won't last for long. Long term stories are good for sheep's which always get slaughtered.

  2. Anonymous on October 10th, 2009 10:35 PM

    good ,sweet and sort analysis.

  3. Anonymous on October 11th, 2009 3:12 AM

    good info

  4. Anonymous on October 11th, 2009 11:38 AM

    Brokerage Recommendations on IndiaBullsPower Ltd

    HSBC Direct – AVOID
    Apollo Sindhoori – AVOID
    Sharekhan – scope for the short-term gain is limited
    Tata Securities – Indiabulls Power IPO may not provide an immediate return.
    Unicon – Subscribe
    Prabhudas Liladhar – Subscribe
    Sushil Finance – No Recommendation

    Look at the way Unicon and Prabhudas are recommending for such a third rate issue, they are asking to subscribe.. simply biased and unacceptable. Investors Ditch both Unicon and Prabhudas Liladhar broking houses.

  5. Anonymous on October 11th, 2009 10:09 PM

    Excellent analysis (Always)

  6. Anonymous on October 12th, 2009 2:08 PM

    nice..

  7. Anonymous on October 12th, 2009 8:26 PM

    My question is – instead of investing in Adani/IPL, does it make sense to add NTPC? Kindly post your thoughts.

    Rahul
    Pune

  8. Webmaster on October 13th, 2009 11:07 AM

    Rahul:

    Rahul yo ucan also look at other power companies. Drop me a line to feedback @ dalalstreet Dot biz and I'll send you some reports which you can go through and choose your pick.

  9. Anonymous on October 14th, 2009 11:04 AM

    Religare Hichens Harrison – AVOID the IPO.

    The issue is priced at ~10% premium to the lower end of the IPO price band. Further, in light of the execution risks involved, inadequate coal linkages and concerns over offtake, we recommend that investors Avoid the IPO.

  10. Anonymous on October 18th, 2009 11:37 AM

    Dude, guess what , i was watching samvat 2066 on cnbc tv and in that Ace investor Rajesh Jhunjunwala said the same thign as you have written above here – These Power companies are the Internet Companies of 1999. LOL Hats off to you man!!!

  11. Anonymous on November 20th, 2009 1:55 PM

    India bull power now quoated at Rs.33/- which 30 % lower than issue price. As many of them view is correct. Do not buy this scrip untill their project is executed

    n.sadaiappan
    20.11.2009

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