 "Power Grid falls 15%: Secondary issue may be offered at a discount")
Shares of Power Grid Corporation of India fell around 15 percent after the company said it would issue 694.5 million new shares in a secondary offering to raise funds.
The board of state-owned electric utilities company at its meeting held on August 01, 2013, has approved the FPO of 15% of existing paid up share capital comprising fresh issue of 694 million equity shares, for augmenting resources of company to fund its investment programme, Power Grid Corporation said in a filing.
Shares fell on expectations that the state-run utility would price the offering at a discount to attract investor interest, and the negative impact on its P/E ratio from the equity dilution, traders said.
The company said on Thursday its board approved fresh public issue of up to 15 percent of existing paid up share capital.
“The FPO (Follow-on Public Offering) announcement is a culmination of uncertainty, in a stock with strong fundamentals. However, the overhang of a fresh issue is a key risk to our OW (Overweight rating) in the near-term,” JPMorgan wrote in a note to clients.
Agencies
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