Real estate companies planning to tap the equity market in 2010 heaved a sigh of relief on Tuesday. Godrej Properties Ltd beat the recent trend of lacklustre debuts by most issues and ended the day with a record gain of almost 20%. Market analysts said the performance recognised the issue?s attractive pricing. Real estate companies plan to raise over Rs 20,000 crore this year.
Shares of Godrej Properties, which raised Rs 426 crore from the IPO, rose to Rs 586.80 intra-day and closed at Rs 534.33 on the BSE, a 9% gain over the offer price of Rs 490. It opened the day with a 4% gain at Rs 510. The average opening gain for public issues throughout 2009 has rarely exceeded 2%. ?The credibility of the promoter group, coupled with .a margin on the table for IPO investors, always works wonders,? said Spice Group president-finance Sudip Bandyopadhyay.
The modest size, together with strong anchor investors, also gave the secondary market confidence in the issue. Anchor investors picked up around 17 lakh shares at Rs 530. These included JF India Fund, JF Eastern Smaller Companies Fund, Ward Ferry Management and Royal Bank of Scotland.
In a report, Angel Broking said the company was deploying an asset-light model that would avoid direct land dealings–the bane of most real estate companies. Among the plans of Godrej Properties is a 35-acre project near Mumbai, according to its prospectus. It is part of the Godrej group, which has interests largely in consumer goods.
While Angel said the issue was fairly priced, in a contrarian view, Karvy Stock Broking vice-president Ambareesh Baliga said, ?We still believe that the pricing was aggressive. However, markets remaining in good position helped the debut. Apart from that, in the last few trading sessions, mid-cap stocks have surged and this can be also a reason why the IPO did well.?