Valuations High For Reliance Power IPO

There is lot of buzz about new listing from Anil Dhirubhai Ambani Group''s Reliance Power, how much will it be worth and what will the pricing be?

UBS is valuing Reliance Power between Rs 71,800-92,100 crore and says that Reliance Energy''s 50 per cent shareholding in Reliance Power is worth Rs 35,900-46,100 crore. This translates into another Rs 1,571-1,995 for every share of Reliance Energy.

Analysts also see big value in the Reliance Power IPO. UBS says that the cost of capital for Reliance Power would be 20 per cent less than NTPC. It also believes that the gas supply dispute will be resolved and sees no single risk to fuel supply.

It also views that Reliance Power is positioned to win upcoming UMPP projects. However, there are some risks associated with Reliance Power future business.

UBS says that gas allocation and pricing needs to be monitored closely and if rules prevent, carbon credit trades from gas-based plants could affect revenues.