Ongoing BPCL’s FPO: A possible return of 20%; Do you prefer rumors over profit?
Thu, Feb 1, 2018 3:03 PM on Latest, Exclusive, Featured, Company Analysis, Stock Market,
Butwal Power Company Limited's (BPCL) Further Public Offering (FPO) has been one of the most controversial FPO issuances in the history of stock market. The company went through a lot of setbacks in regards to its FPO pricing in the initial phase. Now that the company has finally issued its FPO, yet the company has been facing a lot of criticisms. The criticisms, however, look rational only to a level when it is backed up by truth and logic, but the critics in context of BPCL has gone far. These critics have questioned not only BPCL’s FPO but the existence of hydropower industry, authorities such as SEBON, ICRA and all the concerned delegates related to IPO/FPO approval and issuance.
The investors who barely take financial advices while investing lakhs in secondary market have been so influenced by these critics that the financial advisors are being bombarded with phone calls and text messages on BPCL’s query. However, are these buzzes even necessary when the investors are simply investing either Rs 5,010 in case of 10 units at the minimum or Rs 20,040 for 40 units at the maximum? Is the confusion even sensible when there is a sure shot return of 20% in the invested shares of BPCL? And finally, is this a right time for the concerns when there is merely a day left for FPO application while the issues were completely ignored during the issuance? This article comes with an optimistic approach to prevent smart players and new players to get carried away by the rumors in several online portals regarding BPCL’s FPO and secure their investment portfolio.
The profit on BPCL:
As an investor, the first concern is the profit on investment in a company’s shares. In regards to BPCL, it’s market price stands at Rs 617 as of 31st January, 2018. Assuming that, even if the market price of the company will stand at Rs 600 in the near future, the investors will profit by 20% (i.e. a return of Rs 1000 for every 10 units invested). Further, the company’s 52 weeks low has been observed at Rs 464. So, if this market price is applicable, then the investors will lose a mere 7% (i.e. Rs 370 in every 10 units invested). The article does not intend to undermine the loss of investors, however, it cannot be discarded that the probability of loss is comparatively lower than the probability of profit. Furthermore, the 52 weeks low price as Rs 464 is a good base of the hydropower company as it is not that low in comparison to the other companies.
So, the investors running behind the made up stories of BPCL are simply losing the opportunity for 20% of return on investment.
The speculators can in fact benefit from the current spread of the company. Given that the market price is around Rs 617, the FPO is being floated at Rs 501, therefore, the spread of the company is tentatively around Rs 116. The spread might get wider or narrower. This completely depends on the market but for now, the investors have a spread that amounts to more than Rs 100 per share. This shows that BPCL is rather a profitable investment compared to the secondary market investment considering secondary market goes around uncertainty and imposes several charges as commission and taxes.
While the critics have focused on the possibility of decreasing market value of the company, the good prospects have been hidden to the prospective investors. The reserves of BPCL will increase by 1.50 arba while paid up capital will reach Rs 2.21 arba after the FPO issuance. This further reflects that investors will even gain bonus share from BPCL’s premium amount collected if they hold their shares for future. Those who do not have a long run investment strategy can sell the shares for Rs 600 and still profit (given that the company has been traded at or above Rs 600 since April of 2017).
BPCL alone will not be the victim of the bearish market:
Critics have also blamed bearish trend of the market for not investing in BPCL’s FPO. However, at times of bearish trend, would BPCL alone be the victim of the falling price? All other companies would also be affected by the bearish trend. Furthermore, the market has been seen in the downward trajectory since last few months yet BPCL is one of those hydropower companies whose market price has not gone down below 600 since last seven months. This proves that the company has survived even the bearish trend of the market in the last few months with its 52 weeks low price at just Rs 464. Thus, blaming the bearish trend solely and restricting oneself from investing in BPCL is nowhere seen to be reasonable.
The duty has been done:
The major concern of BPCL’s FPO controversies deals with SEBON’s approval and ICRA’s rating. The decision has already been provided. SEBON goes through a series of procedures while finalizing the IPO/FPO price. It is definitely not a one day decision that SEBON undertakes. While the FPO has already been floated with SEBON’s approval i.e. what is to be done has already been done, now would the protest make any difference? Furthermore, the compliances that the hydropower company has to meet are the sole responsibility of the regulatory body, so it must have been done under rigorous discussion and based on the future plans of the company.
ICRA, an independent rating agency, has assigned 3 to BPCL’s FPO. Even ICRA’s rating has been doubted by several critics while the same rating agency has been considered to invest in all the other floated IPOs and FPOs till the date.
Even if the SEBON’s and ICRA’s decision are to be objected, is it the right time to make the issue so aggressive? Magh 19th (tomorrow) is the last day to close the application for the company’s FPO so, if the issue had to be addressed, it could have been done beforehand. The delay in such instances has rather proved to be biasness towards the company and has faded confidence of the prospective investors.
SEBON ensure reality about Butwal Power Company; requested not to follow rumour going on
The rumors: Truth or gimmick? :
The author does not restrict the freedom to voice one’s opinion but a real world example similar to BPCL is not hidden to author and other investment pioneers. For instance, going back to Mangsir, 2072, Shikhar Insurance Company had floated its FPO at Rs 650 on premium for the first time while its market price hovered around Rs 750 then. The rumors about the company were spread so much that many investors lost confident in the company and many of them restrained to apply for the FPO. However, in return, due to less applicants smart players got hold of higher amount of shares in their hand and thus, profited when the market price of the same company went up to Rs 3,500.
Therefore, not every rumor is backed up by truth. There are internal tricks used by the “group of individuals” to get hold of larger number of shares is evident from Shikhar Insurance Company’s FPO. Thus, the confused investors of BPCL are urged to keep rumors aside and get hold of the investment opportunity.
Seeing positive among the negatives:
While each one of the critics has questioned BPCL’s future operational efficiency, the critics have shown one sided negative views towards the company. The company’s engagement in new joint venture in coordination with three major Chinese companies such as Sichuan Investment Group Company Limited (SCIG), Chengdu Xingcheng Investment Group Company Limited (CXIG) and Qingyuan Engineering Consultant Company Limited (QYEC) can be seen as a stepping stone towards the overall hydropower industry of the country. This joint venture, named, International Nepal Hydro Joint Development Company Private Limited has an investment of Rs 1 arba 90 crore with the objective of generating 1000 MW of electricity. Furthermore, BPCL has a number of projects such as Andhikhola Upgrading Project(9.4 MW), Kabeli ‘A’ Hydro Electric Project (37.6 MW), Khudi Hydropower Project (4 MW), Lower Manang Marsyangdi (100 MW) and Nyadi (30 MW) under development which sums up to more than 100 MW. The 51 years old company has an experience in the hydropower sector with several milestones attained in terms of commissioning Tinau Hydro Power Project (1 MW), Andhikhola Hydro Electric & Rural Electrification Project (5.1 MW), Jhimruk Hydro Electric and Rural Electrification project (12 MW), Khimti Hydropower Project (60 MW), Khudi hydropower project (4.2 MW), upgrading Andikhola Hydropower Project (9.4 MW) along with the implementation of Nyadi hydropower project (30 MW) and preparation of Manang Marsyangdi Project (100 MW).
BPCL aims to use the amount collected from the FPO to develop 37.6 MW Kabeli-A Hydropower Project and 30 MW Ngadi Hydropower project. BPCL has 54% stake in Kabeli Energy Limited and 97% stake in Ngadi Hydropower Project.
Final say:
To sum up, the rumors that are in the market can be considered as the means of distractions towards one of the good investment opportunities to the investors. The bad word of mouth about the company is being influenced in an excessive manner. The article is not intended to be biased towards the company but rather provide hidden positive opportunity that investors can gain from this particular investment. The rumor that is currently in existence in the market is not even necessary to the extent it has been blooming around. Therefore, investors are urged to invest in BPCL’s FPO by tomorrow and secure approx. 20% return on their investment.
The debate on the FPO issuance of Butwal Power Company and its current market trend! Know more about BPCL!
Are you thinking of investing in BPCL’s upcoming FPO? What might be the ideal units for investment?
The speculators can in fact benefit from the current spread of the company. Given that the market price is around Rs 617, the FPO is being floated at Rs 501, therefore, the spread of the company is tentatively around Rs 116. The spread might get wider or narrower. This completely depends on the market but for now, the investors have a spread that amounts to more than Rs 100 per share. This shows that BPCL is rather a profitable investment compared to the secondary market investment considering secondary market goes around uncertainty and imposes several charges as commission and taxes.
While the critics have focused on the possibility of decreasing market value of the company, the good prospects have been hidden to the prospective investors. The reserves of BPCL will increase by 1.50 arba while paid up capital will reach Rs 2.21 arba after the FPO issuance. This further reflects that investors will even gain bonus share from BPCL’s premium amount collected if they hold their shares for future. Those who do not have a long run investment strategy can sell the shares for Rs 600 and still profit (given that the company has been traded at or above Rs 600 since April of 2017).
BPCL alone will not be the victim of the bearish market:
Critics have also blamed bearish trend of the market for not investing in BPCL’s FPO. However, at times of bearish trend, would BPCL alone be the victim of the falling price? All other companies would also be affected by the bearish trend. Furthermore, the market has been seen in the downward trajectory since last few months yet BPCL is one of those hydropower companies whose market price has not gone down below 600 since last seven months. This proves that the company has survived even the bearish trend of the market in the last few months with its 52 weeks low price at just Rs 464. Thus, blaming the bearish trend solely and restricting oneself from investing in BPCL is nowhere seen to be reasonable.
The duty has been done:
The major concern of BPCL’s FPO controversies deals with SEBON’s approval and ICRA’s rating. The decision has already been provided. SEBON goes through a series of procedures while finalizing the IPO/FPO price. It is definitely not a one day decision that SEBON undertakes. While the FPO has already been floated with SEBON’s approval i.e. what is to be done has already been done, now would the protest make any difference? Furthermore, the compliances that the hydropower company has to meet are the sole responsibility of the regulatory body, so it must have been done under rigorous discussion and based on the future plans of the company.
ICRA, an independent rating agency, has assigned 3 to BPCL’s FPO. Even ICRA’s rating has been doubted by several critics while the same rating agency has been considered to invest in all the other floated IPOs and FPOs till the date.
Even if the SEBON’s and ICRA’s decision are to be objected, is it the right time to make the issue so aggressive? Magh 19th (tomorrow) is the last day to close the application for the company’s FPO so, if the issue had to be addressed, it could have been done beforehand. The delay in such instances has rather proved to be biasness towards the company and has faded confidence of the prospective investors.
SEBON ensure reality about Butwal Power Company; requested not to follow rumour going on
The rumors: Truth or gimmick? :
The author does not restrict the freedom to voice one’s opinion but a real world example similar to BPCL is not hidden to author and other investment pioneers. For instance, going back to Mangsir, 2072, Shikhar Insurance Company had floated its FPO at Rs 650 on premium for the first time while its market price hovered around Rs 750 then. The rumors about the company were spread so much that many investors lost confident in the company and many of them restrained to apply for the FPO. However, in return, due to less applicants smart players got hold of higher amount of shares in their hand and thus, profited when the market price of the same company went up to Rs 3,500.
Therefore, not every rumor is backed up by truth. There are internal tricks used by the “group of individuals” to get hold of larger number of shares is evident from Shikhar Insurance Company’s FPO. Thus, the confused investors of BPCL are urged to keep rumors aside and get hold of the investment opportunity.
Seeing positive among the negatives:
While each one of the critics has questioned BPCL’s future operational efficiency, the critics have shown one sided negative views towards the company. The company’s engagement in new joint venture in coordination with three major Chinese companies such as Sichuan Investment Group Company Limited (SCIG), Chengdu Xingcheng Investment Group Company Limited (CXIG) and Qingyuan Engineering Consultant Company Limited (QYEC) can be seen as a stepping stone towards the overall hydropower industry of the country. This joint venture, named, International Nepal Hydro Joint Development Company Private Limited has an investment of Rs 1 arba 90 crore with the objective of generating 1000 MW of electricity. Furthermore, BPCL has a number of projects such as Andhikhola Upgrading Project(9.4 MW), Kabeli ‘A’ Hydro Electric Project (37.6 MW), Khudi Hydropower Project (4 MW), Lower Manang Marsyangdi (100 MW) and Nyadi (30 MW) under development which sums up to more than 100 MW. The 51 years old company has an experience in the hydropower sector with several milestones attained in terms of commissioning Tinau Hydro Power Project (1 MW), Andhikhola Hydro Electric & Rural Electrification Project (5.1 MW), Jhimruk Hydro Electric and Rural Electrification project (12 MW), Khimti Hydropower Project (60 MW), Khudi hydropower project (4.2 MW), upgrading Andikhola Hydropower Project (9.4 MW) along with the implementation of Nyadi hydropower project (30 MW) and preparation of Manang Marsyangdi Project (100 MW).
BPCL aims to use the amount collected from the FPO to develop 37.6 MW Kabeli-A Hydropower Project and 30 MW Ngadi Hydropower project. BPCL has 54% stake in Kabeli Energy Limited and 97% stake in Ngadi Hydropower Project.
Final say:
To sum up, the rumors that are in the market can be considered as the means of distractions towards one of the good investment opportunities to the investors. The bad word of mouth about the company is being influenced in an excessive manner. The article is not intended to be biased towards the company but rather provide hidden positive opportunity that investors can gain from this particular investment. The rumor that is currently in existence in the market is not even necessary to the extent it has been blooming around. Therefore, investors are urged to invest in BPCL’s FPO by tomorrow and secure approx. 20% return on their investment.
The debate on the FPO issuance of Butwal Power Company and its current market trend! Know more about BPCL!
Are you thinking of investing in BPCL’s upcoming FPO? What might be the ideal units for investment?
