By IANS
Mumbai : Reliance Power Ltd (RPL), which last month made a record initial public offer (IPO) of about $3 billion, slid sharply by more than 17 percent Monday despite listing at Rs.547.80 at the Bombay Stock Exchange (BSE), a premium of more than 20 percent over its offer price of Rs.450.
RPL, a subsidiary of Reliance Energy Ltd and part of the Reliance Anil Dhirubhai Ambani Group (RADAG), listed at Rs.530 at the National Stock Exchange (NSE), a premium of about 18 percent. It, however, lost ground rapidly and lost almost 17 percent at the NSE in afternoon trade.
Explaining the fall of the much-awaited scrip, stockbroker and analyst J.P. Purohit said: “It was a knee-jerk reaction on the part of investors to get out of the counter. It was also expected if you take into account the current market trend where new IPOs are highly priced.”
Financial analyst Deven Malkan said: “Reliance Power has faced the same fate which Wockhardt and Emmar had faced some days back. In both the cases, they had overpriced the issue without having any ground assets except for plans on paper.”
The firm had entered the capital market with an IPO of 260 million equity shares of Rs.10 each. The IPO was subscribed within a minute of its opening Jan 15. It was oversubscribed 73 times when the IPO closed Jan 18.
In the meanwhile, however, Indian markets – in tandem with global peers – turned extremely volatile on fears of a US recession. The bellwether index has fallen by more than 18 percent since an all-time high of 21,206.77 points Jan 10.
The turbulence also derailed the two IPOs of Wockhardt Hospitals Ltd and Emaar MGF Land, forcing the companies to withdraw their offerings because of extremely poor response.
“Market sentiments have changed and punters are waiting for it (RPL) to come down to Rs.150, which it should been posted at in the initial stage,” said Malkan.
Analysts were of the opinion that Anil Ambani owned Reliance Mutual Fund and many large global fund managers might come to the rescue of RPL to stabilise its price.
However, officials at Reliance Capital, another RADAG company, declined to comment on the issue.
RPL’s stock opened the day at Rs.547.80 on the BSE and touched a high of Rs.599.90 before slumping to Rs.372.90 at 3.25 p.m.
It opened at Rs.530 on NSE, but a huge sell off pulled it down to Rs.368 at 3.25 p.m.
Reliance Power is the flagship company of the RADAG to develop, construct and operate power generation projects. The company is currently developing 12 power projects with a combined planned installed capacity of 28,000 MW, one of the largest portfolios of power generation assets under development.