Power Mech falls 8% on debut

Poor listing despite strong demand for IPO; experts fear investors may turn away from IPOs amid volatility

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Power Mech Projects made a dismal debut on the bourses with the stock slipping more than eight per cent on Wednesday as volatile markets took a toll.

The stock opened at Rs 600, six per cent below its issue price and touched a low of Rs 580 intra-day in a volatile Mumbai market. The stock closed at Rs 585.75, 8.5 per cent below its issue price.

The tepid performance on the first day was despite huge demand for the company’s Rs 270 crore-IPO earlier this month.  The company’s IPO was subscribed nearly 40 times, as its three million share-offering saw bids for nearly 114 million shares.

Market experts say the poor listing could make investors wary of forthcoming IPOs. As many as four IPOs – Shree Pushkar Chemicals & Fertilisers, Pennar Engineered Building Systems, Prabhat Dairy, Sadhav Infrastructure Project — are looking to mop up about Rs 1,200 crore. Prabhat Dairy and Sadhav Infrastructure Project have an issue size of about Rs 500 crore, while the other two issues are smaller.

Adverse sentiment might impact the IPOs, say experts. “Given the turmoil in the market some liquidity will dry up for IPOs. However, good companies with reasonable valuations will see enough appetite,” said Ajay Saraj, executive director, ICICI Securities.

Added another merchant banker: “It all depends on the market sentiment, the smaller IPOs may sail through but the larger issues may face a problem.”

Six of the 10 companies listed this year, including Power Mech, are trading above the issue price. VRL Logistics is the highest gainer, up nearly 92 per cent over the issue price. Manpasand Beverages and Syngene International, listed this month, are up 28 per cent and 27 per cent, respectively. Among the losers, Adlabs Entertainment and MEP Infra Developers, have shed the most at 31 per cent and 32 per cent, respectively. The Sensex has shed 6.5 per cent in the year to date.

Power Mech’s IPO had seen demand from all categories of investors.

The issue saw demand from a most of mutual fund houses, who applied as anchor investors.