The share price of NTPC, the public sector power giant which had last week raised over Rs 8,000 crore through one of the biggest follow-on public offers (FPO), on Wednesday fell below the floor price of that offer, of Rs 201.
Brokers said the NTPC issue was not priced correctly for retail investors, after it had run up sharply prior to the FPO. According to brokers, this new fall could make it tough for other PSU’s FPO plans, lined up for the next few months.
The FPO of Rural Electrification Corporation is likely to be launched this month and NMDC’s next month. Both together could raise up to Rs 20,000 crore. Some of the other FPOs likely to be launched in the next financial year include those of SAIL, MMTC and Hindustan Copper.
The NTPC share fell below the FPO price within just three trading sessions. The share was last traded on Wednesday at Rs 200.45, down 1.6 percent on the Bombay Stock Exchange (BSE). The BSE’s key equity benchmark index, the Sensex, was down 0.75 per cent. The NTPC share traded at around Rs 210 during the start of December 2009, rose to Rs 230 in January 2010 and started falling after January 20.
“NTPC has set a poor record at the start of 2010 and other FPOs could find it difficult to get huge retail subscription after this fall in share price. The government and bankers will have to bring a sea change in strategy to market other forthcoming FPOs,” said Deven Choksey, managing director of Mumbai based K R Choksey Shares and Securities.