Sterlite Power files DRHP for a Rs 1,250 crore IPO

Business Tycoons and Mining magnate Anil Agarwal's Sterlite Power Transmission Limited (SPTL) is all set to raise funds from the primary markets via its initial stake sale. The power transmission firm has filed the draft red herring prospectus (DRHP) with the market regulator Securities and Exchange Board of India (Sebi) to raise up to Rs 1,250 crore. The initial primary offer (IPO) of the company will entirely consist of the issuance of fresh equity shares with a face value of Rs 2 each. There will be a reservation of shares for employees of the company, but more details on this are still awaited. The company, in consultation with issue managers, may raise Rs 220 crore via pre-IPO placement, which may subsequently reduce the issue size of the company.

Anil Agarwal and Twin Star Overseas promoted Sterlite Power Transmission will be listed on both the major exchanges- BSE and NSE. The company has allocated 75% of the net issue for qualified institutional bidders (QIB), whereas 15% of the net issue is reserved for non-institutional investors. Retail bidders will get the remaining 10% of the issue. SPTL has appointed Axis Capital Limited, ICICI Securities Limited, and JM Financial Limited as the book running lead managers to the issue. KFin Technologies Private Limited is the registrar of the issue.

Financial health

The company reported a consolidated profit after tax (PAT) of Rs 870.12 crore in the financial year 2020-21, which was Rs 942.97 crore in the previous fiscal. In the financial year ended on March 31, 2021, the consolidated income from the operations of the company stood at Rs 2,092.39 crore in the June 2021 quarter, which was about one-third lower than the income of Rs 3,004.32 crore in the fiscal year 2019-20. It reported a consolidated income of Rs 3,550.06 crore in the financial year 2018-19, with a net loss of Rs 524.76 crore.

However, the expenses of the company were reduced to Rs 2,657.76 crore in FY2021 from Rs 3,728.32 crore in FY2020. The expenses in FY2019 were Rs 4,087.73 crore. Sterlite Power manufactures power products, and is in the business of power transmission, and offers solutions for problems of the intersection of time-space, and capital. It is the second most prominent power transmission company of India after PowerGrid and is ahead of Adani Transmission and Essel Group in terms of market share. The Institute of Energy Economics and Financial Analysis (IEEFA), in a report released in February 2020, pegged Sterlite Power’s market share at 31.5 percent in terms of tariff. PowerGrid had a market share of 36 percent, and Adani Transmission less than 18 percent. Sterlite has approximately 13,500 circuit km of transmission lines.