Bharti Ipo Gets A Cautious Welcome

The floor price of Rs 45 a share announced by Bharti Tele-Ventures has evoked mixed response among analysts and the telecom industry.

Though a large section of analysts has welcomed the floor price of Rs 45 saying the group fixed the price at a reasonable level, the other section feels that the IPO is unlikely to bring cheers to short-term investors.

Satish Jain, senior analyst with ASK Raymond James, said the IPO will be attractive to long term investors. But for the short term investors looking at immediate gains, the maiden float is unlikely to offer any substantial returns, he said.

"Since the company is eyeing a large footprint in the telecom market, Bharti may not make enough gains in the short term. This may affect the company's plans to offer any dividends in the initial stages. However, we should not compare Bharti with other private telecom companies (read Hughes Tele.com) already listed here," Jain added.

"As the market perception about Bharti is really encouraging, they could see a major success in the primary market. Both retail and financial investors are waiting for the right opportunity," a top executive with a cellular company said here on Wednesday.

According to marketmen, the primary market was expecting a price band of Rs 50 to Rs 60 as the floor price. "We are excited to see the Rs 45 range. However, the possible availability of a huge floating stake in the secondary market may not help appreciate the share price," said analysts.

Analysts feel that the stock should get some momentum after 4-6 months of listing. The shares will be listed on the Bombay and National stock exchanges and begin trading on February 17. "Just on the basis of the floor price, Bharti will be among India's top 10 companies in terms of market capitalisation," analysts said.

According to them, the actual price, to be finalised through a 100 per cent book-building, will almost certainly be higher as the floor rate is below the Rs 52 a share paid by a clutch of private equity investors last May. "A downward revision in the floor price can not also be ruled out," they said.

Bharti had raised $481 million then through a private placement of shares to Singapore Telecom, private equity fund EM Warburg Pincus, International Finance Corp and New York Life Insurance Co.