Shares of Indian Energy Exchange (IEX) ended 1.5 per cent lower over its issue price during their stock market debut on Monday. The stock had dropped as much as nine per cent, however, managed to recoup most of the losses. The stock ended at Rs 1,625 compared to initial public offer (IPO) price of Rs 1,650. It hit a low of Rs 1,500 and a high of Rs 1,660 on the National Stock Exchange (NSE), where Rs 540 crore worth of shares got traded. IEX is India's largest power trading exchange.
Market players said the stock rebounded from the day's low on the back of buying by overseas investors. Foreign portfolio investors (FPIs) were not allowed to buy shares of the company in the IPO due to India's foreign direct investment (FDI) policy. As per the FDI policy, FPIs are only allowed buy shares of a power trading exchange in the secondary market.
Interestingly, IEX had to cancel allotment made to FPI investors in the anchor category. It had finalised allotment of shares worth Rs 300 crore in the anchor category to a clutch of domestic and overseas investors. Some of the FPIs allotted shares included JP Morgan, Nomura and Baillee Gifford. The allotment made to FPIs had to be revoked during the firm's IPO.
"There was some pent up demand from overseas investors. They could have bought the shares in the secondary market after the stock fell as much as 10 per cent," said an investment banker.
The response to IEX's Rs 1,000 crore was lukewarm, with the offering getting 2.2 times subscription. IEX offering was entirely an offer for sale by existing investors. Most brokerages had said the IPO was priced at "fair valuations". At the IPO price, IEX was valued at 44.1 times its FY17 earnings.
Between FY13-17, IEX had reported compounded growth in revenue and profit of 14 per cent and 12 per cent, respectively. IEX had Rs 498 crore worth of cash on its balance sheet at the end of FY17.