Power rules IPO market

'Power' seems to be the buzzword when it comes to big-ticket IPOs.

Steel-to-energy business group run by industrialist and lawmaker Naveen Jindal today announced an IPO worth Rs 10,000 crore -- a public issue next only to Anil Ambani group's Reliance Power in size.

Besides, the latest power IPO, which has potential to give Jindal Power a market value of Rs 1 lakh crore, follows a spate of public offerings from the sector that have hit the street during 2009 as also in the past few years.

Though the number of IPOs looks impressive, the post-IPO performance has not been so great for these companies in the stock market. Barring state-run power firms REC, PGCIL and Power Finance Corp, whose IPOs came during 2007 and 2008, most of the companies from this sector have failed to hold even above their issue price.

These include Reliance Power, which is so far credited with the country's biggest ever IPO. The company had raised Rs 11,800 crore in January 2008.

After Reliance Power, Jindal Power could be the second-biggest IPO in India. Currently, state-run ONGC, which had raised Rs 9,500 crore in 2004, holds that record.

The year 2009 saw as many as 19 companies raising about Rs 40,000 crore from the primary market, of which four were from the power sector.

Of the four power sector IPOs to light up the primary sector, the first one was Adani Power's Rs 3,000 crore issue, followed by NHPC (Rs 6,000 crore), Indiabulls Power (Rs 1,700 crore) and JSW Energy (Rs 2,700 crore).

Despite huge public demand for Adani Power, NHPC and Indiabulls Power's share sale, the issue flunked on the debut trade in the secondary market with all of them closing below the IPO price on the day of listing.

Marketmen said longer gestation period and over valuation at the time of initial share sale are keeping investors away from power stocks in the secondary market.