Shares of Bharti Infratel(BIL) will list on the BSE and NSE on Friday the 28th of December and this would be the last of the three back to back issues. The question uppermost in mind would be the fate of BIL on listing day.When BhartiAirtel which had issued shares in January-February 2002, listed on the 18th of February 2002 they traded and closed at a discount on day one. Against an issue price of Rs 45 the share closed below par on day one itself. Thereafter it bottomed out only 11 months later in January 2003 (price Rs 20.65) and traded at par or above par in July 2003.
It took a great company like BhartiAirtel all of 19 months to bottom out and offer investors some returns. What is the assurance that BIL would be any better or better? I am sceptical about the performance of the issue post listing and the fact that 13 merchant bankers and 3 more syndicate members put together were unable to get the HNI and retail investors to subscribe is a cause for concern.
The price band was Rs 210-240 with a retail discount of Rs 10. The issue was priced at Rs 220 which means the retail allocation was at Rs 210. The non-retail price of Rs 220 is significant as this was the price Rs 219.38 to be precise at which PE investors invested in Bharti Infratel in March 2008. In rupee terms other than the dividends given by the company there has been no gain for investors in 57 months. However in dollar terms there has been a substantial loss as the investment was made at a rupee dollar parity of 39 while currently the currency has depreciated to 54-55 to the dollar.
My question to investors is when we as a category or class of people have not made money in the issue of BhartiAirtel in 18 months after the issue listed, PE investors have not made money even 57 months after listing, why should we expect to make money from the Bhartis ?
I think the answer is there for all and my strong advice to investors is let the share list and trade. In course of time the share will settle at a stable price. Then and only then look at buying the share. Simply avoid for now.
