State-run defence equipment maker Bharat Dynamics Ltd ended nearly 9% lower on Friday as it made a disappointing debut on the stock exchanges.
The stock recouped some of its losses after listing at a steep discount to the issue price.
The shares began trading on the BSE at Rs 360 apiece, down 16% from the initial public offering price of Rs 428, stock-exchange data showed. The shares touched a high of Rs 402.80 in early morning trade.
It ended Friday's session at Rs 390.70, down 8.71%.
The company now has a market capitalisation of Rs 7,160 crore ($1.1 billion). It had sought a valuation of Rs 7,844 crore ($1.2 billion) at the upper end of the Rs 413-428 price band.
Indian shares fell over 1 percent on Friday, with the broader NSE index closing below the 10,000 level for the first time since October, after heated rhetoric between the United States and China over import tariffs sparked fears of a global trade war.
The NSE Nifty closed 1.15 percent lower at 9,998.05, while the benchmark BSE Sensex ended down 1.24 percent at 32,596.54.
Bharat Dynamics is the seventh company to list on the main board of the bourses in 2018. Four of the previous six had gained on debut.
The company's Rs 960.94 crore ($148 million) IPO was subscribed 1.13 times. It sailed through with support from institutions and retail investors, though wealthy investors stayed away.
The government’s stake in the company declined to 87.75% after the IPO from 100%. It will get three years to bring its stake down to 75% to meet regulatory norms on minimum public holding.
Bharat Dynamics’ offering comprised a share sale by the government as part of the Rs 72,500 crore disinvestment plan set for the current financial year. The government has already exceeded the target, having raised Rs 92,476 crore. More than a third of that amount, Rs 36,9015 crore, came from a sale of stake in state-run refiner Hindustan Petroleum Corp Ltd to state-run explorer Oil and Natural Gas Corp.
Apart from Bharat Dynamics, the government also sold stakes in state-run defence firms Hindustan Aeronautics Ltd (HAL) and Mishra Dhatu Nigam Ltd this month. HAL’s Rs 4,229 crore IPO was bailed out by state-run Life Insurance Corporation (LIC) of India.
The government has set a divestment target of Rs 80,000 crore for 2018-19, as it looks to boost rural and infrastructure spending as well as contain the fiscal deficit ahead of general elections by next year.
Bharat Dynamics had filed for the IPO on 22 January. It received regulatory clearance on 15 February. SBI Capital Markets, IDBI Capital Markets & Securities and Yes Securities managed the IPO.
Bharat Dynamics was incorporated in 1970. The company is the sole supplier of surface-to-air missiles and anti-tank guided missiles to the Indian armed forces. It also makes underwater weapons, launchers, torpedoes and other equipment. It had an order book of Rs 11,164 crore as on 31 October 2017.
The company runs three factories in Hyderabad, Bhanur (both in Telangana) and Visakhapatnam (Andhra Pradesh). It is setting up two more factories at Ibrahimpatnam (near Hyderabad) and Amravati in Maharashtra to make missiles.