Mumbai: Shares of Infibeam Incorporation Ltd eked out meagre gains on Monday, the company’s first day as a public firm, following a lukewarm response to its 450 crore initial public offering (IPO) last month, and analysts expect the price to drop from here, owing to their expensive valuation.

The Ahmedabad-based company is India’s first e-commerce firm to go public.

According to its share sale document, Infibeam is an e-commerce firm focused on developing an integrated and synergistic e-commerce business model.

Infibeam, which had set an IPO price band of 360-432, had priced shares at the upper end of 432. Its shares opened at 458 on the BSE, and hit a low of 439.90 and a high of 466.90, before closing at 445.70, up 3.17% from the issue price. The benchmark Sensex rose 0.51% to close at 25399.65 points.

“We believe the issue is more than fairly priced. It is very difficult to make more money than this in this issue," said Dhananjay Sinha, head of research at Emkay Global Financial Services Ltd, adding that he expects the stock to drift lower in days to come.

“The differentiating factor compared to peers is minimal, and they are adding to concerns over the still evolving Indian e-commerce industry," said Sinha.

The Indian e-commerce sector is fiercely competitive. It is currently facing several headwinds, including funding, and many companies are battling severe stress on valuations.

While Infibeam is much smaller than Flipkart and Snapdeal, India’s biggest online retailers, it is still among the few profitable Internet companies.

The company, founded by former Amazon executive Vishal Mehta, however, had a brush with problems even before the launch of the issue, with two of the four domestic investment banks opting out over concerns about pricing and timing.

Kotak Mahindra Capital Co. Ltd and ICICI Securities Ltd withdrew as bankers to the issue, leaving SBI Capital Markets Ltd and Elara Capital (India) Pvt. Ltd to manage the offer.

The issue managed to get fully subscribed, but only on the last day of the listing. In an advertisement in The Financial Express on Monday, the company said its issue had been subscribed 1.3 times at its issue price, with the portion reserved for qualified institutional buyers subscribed 1 time, and that meant for retail investors filled 1.5 times.

According to data from National Stock Exchange (NSE) and BSE, which computed subscription data on the basis of the lower end of the price band, the issue was subscribed 1.1 times at close.

“We expected it (the listing) to be lukewarm, and it is in line with our expectations. I would not have been surprised if it closed 3% lower than the issue price," said Amar Ambani, head of research at IIFL Holdings Ltd.

Infibeam had managed to turned profitable in the first six months of 2015-16, and posted a revenue of 171.3 crore and a net profit of 6.6 crore for the six months ended September 2015.

However, it reported a revenue of 288.2 crore and a net loss of 9.8 crore for the year ended 31 March 2015.

Ambani, who had an “avoid" rating on the IPO, said that if the prices were to fall 15-20% below 360, the lower end of the price band, he could look at reviewing the stock again.

“For any company that wants to list, the message is that, going forward, given the market and liquidity conditions, they need to price it more reasonably, like the Equitas IPO," added Ambani.

Equitas Holdings Ltd’s IPO to raise nearly 2,176 crore opens on Tuesday. The Chennai-based micro-finance lender has priced its shares in the range of 109-110, and at the upper end of the price band, the IPO values the company at almost 3,700 crore.

Infibeam’s issue was not rated by many equity brokerage firms. Apart from IIFL, Angel Broking Pvt. Ltd had rated the issue. The latter had a “neutral" rating on the offer.

The grey market for the issue was lacklustre as interest in Infibeam was weak, and hardly any deals were struck, dealers said.

Infibeam owns and operates the Infibeam BuildaBazaar e-commerce marketplace, which provides value-added services to enable merchants to set up online storefronts. It also operates, a multi-category, e-tail website.

The company also launched .ooo domain registry, and has set up a joint venture company with Sony Entertainment Ltd to develop, build and own software applications by offering downloading and streaming of licensed digital music content.

Analysts are of the view that Infibeam could have tapped other sources of funding such as private equity and venture capital at this stage, instead of going public.

“For e-commernce companies, they should look for other routes for funds, and not target an IPO, which includes retail investors," said Ambani of IIFL.

“And if you are keen on an IPO, you should leave enough on the table for the retail investor," Ambani added.