Share manages to remain positive on day one
Markets had fallen sharply on Monday, but on Tuesday they opened very strongly in Asia as well. Indian markets also opened strong. It was the ideal situation anybody could have hoped for a listing. NHPC had the perfect setting for listing, after huge interest was generated during the road show and the issue garnered oversubscription of over 23 times. Even retail participation was excellent and more than thirteen lac applications were garnered.
The listing ceremony was held at the Convention Centre of the Mumbai Stock Exchange and the share opened at Rs 39 a gain of Rs 3 or 9 % against the issue price of Rs 36. On the NSE the listing was even more spectacular with the stock listing at Rs 42, a gain of Rs 6 or 18 %. Alas! This was too good to be true. On the BSE the stock made a high of Rs 39.75 while on the NSE the open was the high itself. Thereafter even though the BSESENSEX was up as much as 257 points and the NIFTY 73 points, it made no difference to the price of NHPC – the stock just kept on slipping and slipping.
| Exchange | Open | High | Low | Close | Net Change | Traded volume | Delivery | Del % age | Wt Avg |
| BSE | 39.00 | 39.75 | 36.60 | 36.70 | 0.60 | 193593717 | 82387998 | 42.56 | 37.37 |
| NSE | 42.00 | 42.00 | 36.65 | 36.70 | 0.70 | 508832326 | 270162234 | 53.09 | 37.37 |
The table appended above shows the volume which took place and I believe this is the highest traded volume in any share ever on the bourses. A total of 70.24 cr shares were traded on the exchanges and the value of these trades were about Rs 2625 crs. The shares which were sold for delivery were extremely high at 35.255 crs or 50.19 %. In the case of Adani Power the percentage delivery of trade on day one was a mere 33 % and one must also bear in mind that the total traded volume was substantially lower at 26.07 cr shares against 70.24 cr shares in the case of NHPC. The issue of NHPC was for 167.74 cr shares and of this issue the delivery percentage is 21%. This is a high number and clearly shows that investors irrespective of category have a tendency to sell on listing day.
The fact that the stock closed almost at its low indicates that the selling is not over and the stock is likely to continue to be under pressure even today. US markets were substantially down last night and the Dow Jones lost 185 points or 1.95%. If Asian markets continue to be weak taking US cues, NHPC could be in trouble holding on to the issue price of Rs 36.
OIL India issue opens on Monday the 7th of September. The performance on day one of NHPC certainly does not add comfort of any sort to the OIL India issue. The euphoria of NHPC has disappeared and seeing the debacle on listing day, people are now discussing the pricing of NHPC. At the time of the issue nobody was concerned about valuations or the fact that the company had an EPS of just over one rupee and therefore the PE of the company was over 34 times. It may also be mentioned that grey market premiums had touched a staggering Rs 12 or a 33% premium to the issue price of Rs 36. Once again the old adage that grey market premiums disappear as listing day nears held true.
NHPC was the second mega issue and with both being from the power sector, there were high expectations. Power has huge growth potential and the opportunities seem unlimited currently. Both issues have failed to live up to their hype and euphoria created or generated during the road show period. There would be a definite bearing of this on the remaining IPO pipeline which has more than 125 issues lined up. A greater impact would be on the issues from the power sector companies and the PSU divestment companies.
Let us hope promoters and merchant bankers learn from this issue and ensure that there is enough left on the table for the risk taker. One final thought and prayer for the health of the primary market is that NHPC manages to hold on to the issue price and that the promoter of the company lends support to the issue.
