The initial public offer (IPO) of Reliance Power Ltd, considered the largest in the history of the Indian capital market, was fully subscribed within minutes of opening on Tuesday.
NSE data showed that the book-built issue was oversold 10.64 times, receiving bids for 242.67 crore equity shares. The company plans to sell only 26 crore shares. The bids for shares received at the cut-off price numbered 3.69 crore. The company expects to mobilise Rs 11,700 crore through this issue.
At the time of going to press, the QIB category was subscribed 16 times, high net-worth investor category 6.7 times and retail category 0.6 times on the first day. Bidding continued until 8 pm.
While the IPO basked in the overwhelming response, most listed power companies traded lower on Tuesday. Tata Power and power equipment maker Crompton Greaves Ltd were the exceptions, gaining Rs 14.50 and Rs 13.85, respectively. The BSE Power index closed at 4,632.37 points, losing 116.39 points, or 2.45%.
Deven Choksey, MD, KR Choksey Securities, said, ?There was much euphoria in the power sector ahead of the Reliance Power IPO, which resulted in other power sector stocks overstretching themselves. Tuesday?s fall in their prices is mainly due to profit-booking because of their rich valuations rather than investors reducing their exposure to subscribe to the IPO.?
The stock of Reliance Energy Ltd plunged Rs 113, or 4.57%, to Rs 2,361 on Tuesday.
Other prominent losers in the power sector were: Suzlon Energy, which was down by Rs 84.10 or 3.95% at Rs 2,046.25; Bhel, which dipped Rs 58.30 or 2.36% at Rs 2,415.65; Siemens Ltd, which lost Rs 42.85 or 2.14% at Rs 1,960.30; and NTPC Ltd, which decreased Rs 10.95 or 3.84% at Rs 274.
?The fall in the price of power sector stocks is largely because of their stretched valuations.? said Ambareesh Baliga, vice-president, Karvy Stock Broking Ltd. Reliance Power has fixed the price band at Rs 405-450 and the issue closes on January 18. The issue offers a discount of 5% to retail investors, who also have the option to pay only 25% of the application amount up-front.