Genesis Energy shares have been valued at $1.63 per share, near the top of the price range of $1.35 to $1.65, according to a report by Craigs Investment Partners.
The shares could also be worth 10 cents per share more because of the potential for windfall gains in dry years, the report says.
Genesis will be floated by the Government on April 17.
The report says its value range for Genesis was $1.97 per share if National wins the next election and $1.52 per share if Labour wins.
Genesis is the country's biggest electricity retailer, with 37 per cent of residential customers.
It has a retail and wholesale gas business, and it holds 31 per cent of the Kupe oil and gas field.
Craigs says that if Genesis were listed today, relative to other power generator/retailers, it would trade near the top end of the indicative price range.
"We also believe the peer group is undervalued," the report says.
As well, there was a potential 10c per share upside, based on the volatility of wholesale electricity prices and the potential for "windfall gains in the event of a material dry year weather event".
National lake storage levels are currently 79 per cent of average, slumping since early in the year, with a dry spell in the North Island.
The Craigs report says the biggest risk is political, with the potential for industry regulatory change. If Labour wins the next election, the political party has said it will revamp the electricity regime and that could have a "material" negative impact for existing electricity company profits.
As well as the political risks, the electricity sector was also facing a glut of generation capacity.
With such overcapacity in the market, most players would not be able to lift power prices but Genesis was in a "favourable position" to put through power price increases of about 2.2 per cent this year and next to bring it up to industry average levels.
The market was expected to return to a balance between supply and demand in 2018.
Other risk factors included changes to the way transmission pricing is calculated, reduced load from the Tiwai Point aluminium smelter, a cheap new generation source or a failure of Genesis' generation. "Genesis is not well placed to face an overcapacity market that could deteriorate if Tiwai cuts back its [electricity] load," the Craigs report said.
Genesis has inflexible "take or pay" gas contracts, which meant the company is expected to run its gas baseload plants at high capacity, so as to lower the loss on its gas book.