Inox Wind, REC bring cheer to primary market

Shares of Inox Wind soar 35% on debut; REC stock too gains post-OFS

Primary market investors had a reason to cheer on Wednesday, with shares of power solution company Inox Wind soaring 35 per cent on debut and that of state-owned Rural Electrification Corporation (REC) gaining two per cent, a day after its offer for sale (OFS).

Shares of Inox Wind ended at Rs 438, compared to its issue price of Rs 325 a share. REC’s stock closed at Rs 336.25, up nearly four per cent from its OFS price of Rs 325. The gains were even sweeter for retail investors (those investing up to Rs 2,00,000), as an extra five per cent discount was offered to them in both the share sales.

Inox had raised around Rs 1,000 crore from an initial public offering (IPO), which witnessed 13 times more demand than the shares on offer. The IPO, biggest since Bharti Infratel’s Rs 4,500-crore-offering in December 2012,  attracted 400,000 retail applications. The Rs 1,550 crore REC stake sale, 2015-16’s first disinvestment, also saw huge retail interest.

Investment bankers said the gains made on these primary market transactions would attract more investors towards the IPOs and boost prospects of companies waiting to hit the market.

About two dozen companies have filed offer documents with market regulator Sebi to launch their IPOs.

“The momentum to invest in IPOs is slowly picking up. As investors make returns from a few issuances, they will come back with greater propensity to the primary markets. Issuances from quality companies and from promoters with a good record will be an important trigger,” said S Ramesh, joint managing director & member of the board, Kotak Investment Banking.

IPO Wind’s listing day gains follows theme park operator Adlabs Entertainment, whose shares rose 15 per cent on its debut last week. Only two of eight IPOs since 2014 have given negative returns on listing day.

“Investors are willing to support deals that are priced well… Investors also need to be explained the story,” said

S Subramanian, managing director and head of investment banking at Axis Capital, one of the bankers which managed the IPO Wind offering.

Satyen Shah, head (equity capital markets), Edelweiss Financial Services, said, “A couple of IPOs didn’t do well. Inox has helped reverse that trend. All categories of investors made money in this transaction. This will help the primary market. The IPO line is good and we will see a lot more issues this year compared to last year.”