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REC shares shine on first day, ignore market fluctuations

REC shares shine on first day, ignore market fluctuations
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First Published: Thu, Mar 13 2008. 12 21 AM IST

Updated: Thu, Mar 13 2008. 12 21 AM IST
Mumbai: Shares of Rural Electrification Corp. Ltd(REC), the state-owned enterprise that funds power projects in rural India, listed at a premium, at Rs125, on the Bombay Stock Exchange (BSE), even as the benchmark index, the Sensex, lost more than 555 points from its intra-day high to close relatively unchanged.
The shares, which were offered to investors at Rs105 during its initial public offering (IPO), closed at Rs121.2 on BSE—a 15% premium to the issue price. The listing premium was more than 19%.
“The issue was priced fairly,” said Apurva Shah, head of equity research at brokerage Prabhudas Lilladher Pvt. Ltd.
The Rs1,640 crore issue and last week’s listing of GSS America Infotech Ltd, in a relatively small issue, came after a major turbulence in the Indian primary market. Among the 18 new firms that listed stocks this year, only six are trading at a premium now.
The primary market has been eventful this year in India, where the Sensex has lost more than 20%. In mid-January, immediately after the index touched a new peak, investors rushed to subscribe to the largest issue ever—the $3 billion (Rs12,150 crore) IPO of Reliance Power Ltd. Similar interest was seen in other issues during this period, including in Future Capital Holdings Ltd.
However, after the slump in the secondary market, two fairly large issues (of more than $100 million)—that of Emaar MGF Land Ltd and Wockhardt Hospitals Ltd— were wrecked as they failed to find buyers. This resulted in potential issuers shelving or postponing their plans. According to Thomson Financial market data, a string of mega IPO pull-outs from India accounted for a bulk of the $14.3 billion postponed or withdrawn issues in Asia this year.
Withdrawn IPOs from India, including those of Emaar MGF, DLF Office Trust Ltd and Unitech Office Trust Ltd, amount to $13.7 billion, it said.
Reliance Power shares are trading 23.4% below the issue price and Future Capital is down 31%. The biggest losers are Porwal Auto Components Ltd and Precision Pipes and Profiles Co. Ltd, trading 60% and 54% below the offer price.
Meanwhile, shares of IRB Infrastructure Developers Ltd are trading at a 3.9% premium. Other recent issuers on an upswing include Aries Agro Ltd, Burnpur Cement Ltd and OnMobile Global Ltd.
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First Published: Thu, Mar 13 2008. 12 21 AM IST
More Topics: Shares | Stocks | REC | Investment | IPO |