Precision Camshafts slips 6% on debut

The first Initial Public Offering (IPO) of 2016 made a weak trading debut. Automobile ancillary company Precision Camshafts' stock on Monday settled at Rs 174, six per cent below its issue price of Rs 186. During the trading on the National Exchange Stock (NSE), the stock touched a low of Rs 154 and a high of Rs 185.

Precision's IPO had mopped up Rs 400 crore from investors. The issue was subscribed nearly two times. A bulk of the bids had come from institutional and retail investors, while wealthy individuals had largely stayed away from the issue. Precision's offering is also the first issue after the capital market regulator havled the listing timeline to six days. Precision clocked worst Day 1 stock performance since Coffee Day Enterprises. Shares of the coffee chain operator had dropped 18 per cent during its stock market debut in November.

Analysts said the long-term prospectus of the company, engaged in export of camshafts, look promising but the IPO pricing had left little gains on the table. At the IPO price, the company's was valued at nearly 20 times its 2016-17 estimated earnings. Precision bigger peers such as Bharat Forge and Motherson Sumi trade at slightly lower valuations.

Precison's IPO was managed by HDFC Bank, India Infoline and SBI Capital Markets. Investment bankers say Precison's weak debut will not impact investor sentiment, as investors will treat it as an aberration. Narayana Hrudayalaya, Alkem Laboratories and Dr Lal PathLabs , which made their stock market debut on December, had gained over 30 per cent on their first trading day.