Mumbai: PTC India Financial Services, a unit of power trader PTC India, on Wednesday slumped as much as 16% on its debut on the Bombay Stock Exchange (BSE), as investors raised concerns over high valuation and near-term returns.
At 11.47 am, shares of PTC India Financial were at Rs25.55, 8.75% below the issue price, in a Mumbai market that was up 1.15%.
The company, in which Goldman Sachs and Macquarie own stake, had offered to sell 15.7 million shares in the initial public offering to raise about Rs440 crore.
“There is no reason for a financial services company to come at these kind of valuations,” said Arun Kejriwal, director at brokerage KRIS.
He said the stock would be attractive only at a price of Rs17-18, with the possibility of a 20-25% upside in the near-to mid-term.
“The present portfolio of the company is such, some 400-odd crore of rupees that they have invested in equities, nothing is going to get converted into profits in the next 12 months minimum,” he added.
PTC India Financial is a special purpose investment vehicle of PTC India formed to invest in equities and lend to power projects.
“It’s a new company. The profitability of their loan book hasn’t started accruing yet, so they won’t have healthy RoEs (returns on equity) for a while,” said Vijaykumar Bupathy, assistant vice-president, research at Spark Capital.
The IPO is also too costly, he added.
Post the IPO, parent PTC India will hold 60% in the unit, while Goldman Sachs will hold 8.5% and Macquarie 3.1%.
PTC India Financial said it plans to use the proceeds to expand the company’s lending business.