NHPC opened at Rs.39, just 8% bove offer price…
To,
Ms. Sara (Senior Promotion Executive)
Ain Corporation
. M. Plaza, 6- 3- 678/ 2
Power producer NHPC’s shares failed to enthuse retail investors when they opened today for trading, damping the prospects of forthcoming public issues.
· The stock opened at Rs 39, 8 per cent above the offer price of Rs 36. It ended the day at Rs 36.75 on the Bombay Stock Exchange.
· The muted response to NHPC’s shares comes within two weeks of a damp debut for another power producer, Adani Power. Adani shares are trading at Rs 102.70, up 2.7 per cent from the issue price of Rs 100.
· Analysts said other power companies planning initial public offers (IPOs) had already started reviewing their price expectations. Tata Power, Jindal Steel and Power and Indiabulls Power are planning IPOs shortly. The trend could also weigh on Oil India’s IPO, they said.
· Analysts said the response was tepid because these issues were priced on the higher side.
· “NHPC and Adani Power issues were aggressively priced. The impact of these issues will be seen on forthcoming IPOs, which may not witness such high subscription levels
· The pricing left nothing for retail investors or high networth investors (HNIs), Adani and NHPC are long-term bets and considering these companies’ core businesses, it will be difficult for these stocks to witness any big spike in the near term.”
· Selling pressure in the NHPC stock today came from HNIs who had subscribed to the IPO using margin funding from stock brokers. Margin funding allows investors to leverage their subscription. The interest rate for NHPC was around 12 per cent per annum.
· The costing for HNIs who used margin funding came to around Rs 42 per share and they could make profit only above this level. While the IPO was subscribed 23 times, the portion reserved for HNIs was subscribed over 55 times.
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