Unlike recent debutants, the entry of MEP Infrastructure Developers into the secondary market witnessed a lackluster response from the investor community on Wednesday.
The shares of infrastructure firm slid to an intra-day low of R55.45 on BSE on its listing day, 12% below its issue price of R63. The stock recovered a bit and closed at R60.95 (down 3.25%). The Sensex closed 26717.37 points down 722.77 points or 2.63%.
Since March, all companies that tapped primary market except for Ortel Communications, listed with strong first-day gains. While VRL Logistics and Inox Wind saw 43.1% and 34.8% of listing-day gains respectively, Adlabs Entertainment added 6.3% on its debut in the secondary market.
In the second half of April, the R324 crore initial issue of the company had subscribed 1.11 times. While non-institutional investors category received bids 1.51 times the shares offered, Qualified institutional buyers (QIB) applied for 2.78 crore shares against 2.74 crore. Retail investors had given a tepid response by subscribing less than 50 lakh shares (0.97 times).
Investors seem to be apprehensive that apart from weak fundamentals, the recent decision of Maharashtra government to close toll plazas will also have a negative impact on the revenue generation ability of the road maintenance and toll-collection company.
The company intends to use the proceeds from the public issue for general corporate purposes and toward repayment of R262 crore of the total loans availed by subsidiary-company MIPL. The Mumbai based company which had a consolidated debt of R3,776 crore at the end of January 2015.
Despite posting over three fold jump in top line between FY10-14, it has been reporting losses consecutively during the same period mainly on account of higher interest burden. As a result the net worth of the company has been eroded to R152.20 crore as on FY14, according to Capitaline data.
The company, along with its subsidiaries, has operated 68 projects with an aggregate of 122 toll plazas and 783 lanes across 12 states.