The much-hyped listing of Reliance Power Ltd shares proved to be a near fiasco. The stock, which opened at a premium, failed to impress investors who booked profits amid the volatility. High net-worth investors, who sold their leveraged exposure, and the overvaluation of the stock, spoiled the party.
At the National Stock Exchange, R Power shares opened at Rs 530, 17% higher than the offer price of Rs 450. But the stock soon dropped to Rs 355.30 before closing at Rs 372.30, down Rs 77 from the issue price. As many as 13.439 crore shares were traded. At the Bombay Stock Exchange, the stock listed at Rs 547.80 and yo-yoed between a high of Rs 599.90 a low of Rs 372.50 before closing at Rs 372.50. Around 6.38 crore shares exchanged hands.
Experts believe the premium at which R Power listed could possibly be the lowest for any ADAG group company. They said the stock held near the issue price at a time when two major initial public offerings?that of Emaar MGF and Wockhardt Hospitals?were shelved only last week.
Lalit Thakkar, director of research at Angel Broking, said, ?All the froth that was created in the primary market has now cleared with the listing of R Power. At Rs 450, the stock was expensive. We believe investment in Reliance Energy at Rs 1,600, which holds 45% in Reliance Power, is a much better bet.?
?The decline is not specific to Reliance Power. It mirrors the sharp meltdown in global capital markets over the past three weeks. From the time of our IPO, the Sensex is down 20% today, while Reliance Power stock is down 17% from the IPO price. We are confident of delivering superior long-term returns to our shareholders,? said a Reliance Power statement.
The company entered the capital markets with an equity size of 26 crore shares, of which retail investors contributed 6.84 crore and high net-worth individuals contributed 2.28 crore, subscribing to the issue around 77 times. Retail investors took comfort from the concessional price of Rs 430.
Market players, taking a hint from grey markets, were the most disappointed as the grey market premium of the stock declined from Rs 450 to Rs 150 on Sunday. Apurva Shah, head of research at Prabhudas Lilladher, said, ?At such high volumes, it is difficult to say which segment of investors sold, but even before the listing, sentiments were quite jittery and most of investors were talking of doing flip-flop on the first day itself.?
Earlier in the day, before sounding the opening gong at the BSE, Anil Ambani aplogised to rejected applicants to the Reliance Power IPO and also hinted that Reliance Power along with other ADAG group companies would keep fetching investors good returns in the long term.