Let’s face it, Monday was not just a bad day for billionaire Anil Ambani. His group firm — Reliance Power slipped into negative at Dalal Street at opening itself at Rs 430 per share, which is below the issue price of Rs 450 per share.

Touted as biggest ever IPO to hit the Indian market with issue size of Rs 11,700 crore, it failed to hold on to investors’ interest and the hype that saw the scrip touching high of up to Rs 1,000 a share in grey market.

After opening at Rs 430 per share, Reliance Power, subsidairy of Reliance Energy, recovered some of its lost ground and moved to list Rs 548, a premium of 22 per cent to its issue price of Rs 450, on Bombay Stock Exchange (BSE) in the morning sesion. It had hit high of Rs 600 and dropped to low of Rs 355 in late trades.

Finally, it ended at Rs 372.50, a discount of Rs 78, on a volume of 6.38 crore shares that changed hands.
On National Stock Exchange, it was listed at Rs 530, and closed at Rs 372 on hefty volumes of around 13.40.

Free fall

Consequently, Reliance Energy, which holds 50 per cent of stake in Reliance Power, too had to bear the brunt of Reliance Power scrip listing as Reliance Energy shares fell nearly 20 per cent to close at Rs 1582.30 per share.  In fact, a day before Reliance Power issued on January 15, 2008, Reliance Energy was downgraded by Morgan Stanley, which deemed the company’s generation business as overvalued.

With Reliance Power listing going haywire, one segment that affected most from the listing was the high networth investors (HNI) to whom interest cost alone per share works out to Rs 140 per share and issue cost at Rs 450 per share works out to a total of Rs 590 per share. 

Those who did not sell are wondering if there will be any momentum trigger. This is not likely as most of the projects of the company are still to take off.   Reliance Power IPO was subscribed approximately 70 times and attracted over five million bids from all categories of investors with an aggregate commitment of over Rs 7,50,000 crore as against the issue size of Rs 11,560 crore.

With the shelving of two major IPOs, Emaar MGF and Wockhardt Hospitals last week due to poor response, nobody was bullish about Reliance Power.

“There appears to be some kind of a panic out there, it’s got to do with the broader market,” said Mr A.Balasubramaniam, Chief Investment Officer at Birla Sunlife Mutual Funds.

“The listing basically shows that one stock can not lift sentiment irrespective of whatever quarter it comes from unless investors see value in them,” said Pankaj Namdharni, head, equities, SPA Securities.