KSK Energy to slip below Rs 200 in near term

CNBC-TV18's Managing Editor, Udayan Mukherjee - KSK Energy Ventures IPO would have done better in 2006-07. The market is in a kind of frame of mind where it does not like things where the revenues will flow in 4-5 years down the line, and the market wants to see cash flows now.
 
The kind of frame of mind the stock market was in 2006-07, KSK would have been a very successful IPO but I doubt if it will be the case right now although I don’t know about the first half to one hour. But at a time when people are punishing companies which are very established and robust cash flows quarter after quarter, I felt to see why the market will get very enthusiastic about a company which has virtually nothing by way of capacities on the ground and the meaningful capacities only start happening in 3-4 years time culminating in about 7 years time.
 
So if one wants to buy a 2014 dream then sure one can go for KSK but I don’t think the market has the patience because a lot of things are changing.
 
First thing one realises that this is a company which is trying to execute projects in a very vicious environment for capital and so capital availability will be an issue. KSK has nothing on the ground now, it’s only 140-150 Mega Watts (MW) and it wants to make that 9,000 MW in the next 7 years. So most of its projects will now have to be executed in this kind of an environment where interest costs are going up, 70% of the financial closure for these projects has not happened for KSK and they will happen now in a sticky equity environment and a difficult debt environment with interest rates going up.
 
So do you want to buy these stocks now with distant cash flows? I would not for sure in this kind of a market. I don’t think looking at price to book for current 140 MW makes much sense because that is not why one is buying KSK for; one would be buying that for the future.
 
Looking at the numbers and comparing; KSK has virtually no track record compared to Reliance Power’s track record. For buying that distant dream at 30,000 marketcap one would rather be buying Reliance power than buying KSK which doesn’t even have a proven track record.
 
My sense is that one will get this stock around Rs 200 in the market over the days to come or maybe whole lot lower as well, but one doesn’t know what will happen in a day or two because strange things happen on listing.