All eyes on Rural Electrification Corporation & Reliance Infratel issues

MUMBAI: It was a much-awaited event, a trigger expected to infuse new life into the IPO market. So when the Reliance Power stock ended the day way below its issue price, it cast a shadow over the primary market. Industry perception is that shattered investors would take time to come out of the IPO doldrums.

Apathetic investor sentiment or not, all eyes are now on the Rural Electrification Corporation (REC) issue and on yet another issue from the ADAG stable, Reliance Infratel. Needless to say, the fate of both hangs in balance. REC, which is expected to list on the bourses by the third week of March, will later (date not set) be followed by the National Hydroelectric Power Corporation (NHPC) and Reliance Infratel. V-Guard Industries and GSS America Infotech are also scheduled to open for subscription shortly. Other issues on the anvil include UTI AMC, Oil India and MCX.

���The question is more about valuation. The recent IPOs took a hammering as valuations were far too stretched, even if they had been priced according to prevailing market conditions. The global meltdown made it worse. The pricing should leave something on the table for investors,��� said Bonanza portfolio fund manager Anmol Sekhri.

He maintains that REC may not share the fate of the other three issues as it is positioned differently. Yet, there is no denying that investors need to exercise caution while investing in the primary market as recent experiences would have left most with a bitter taste.

���Reliance Infratel still has a lot of time to enter the market. You don���t know how would the market be at that time. But same kind of valuations would not attract investors, at least for the time being,��� added Mr Sekhri. REC, is looking to dilute 18.18% equity through its offering, to raise up to Rs 1,600 crore at a price band of Rs 90-105 per share. Government officials are sanguine about the issue of REC, and are confident it would go through regardless of prevailing market conditions.

NHPC, which had filed its draft prospectus months ago, is yet to receive the green signal and may just have to file afresh. Reliance Infratel, the tower subsidiary of Reliance Communications, has proposed to raise Rs 6,000 crore through an IPO.