Construction firm PSP Projects drops on stock market debut
Photo Credit: Shah Junaid/VCCircle

Construction company PSP Projects Ltd made a weak debut on the stock markets on Monday with its shares listing at a 5.25% discount to their issue price before paring its losses.

Shares of PSP Projects began trading on the BSE at Rs 199 apiece, compared with the initial public offering (IPO) price of Rs 210, stock-exchange data showed. The shares slipped to a low of Rs 189.05 apiece and closed at Rs 208.95. The benchmark Sensex advanced 0.26% to close at 31,109.28 in a choppy trading session.

The company's lacklustre debut comes after its IPO was subscribed 8.6 times.

Ahmedabad-based PSP Projects is the eight company to list on the stock exchanges this year. Six of the previous seven companies gained on their market debut.

Hypermarket chain D-Mart, founded by ace stock market investor Radhakishan Damani, had a stellar debut following its IPO. Its shares soared 114% in the best trading debut in nearly a decade. BSE Ltd’s public offering was yet another hit with investors and was oversubscribed 50 times in February, followed by a stellar listing.

PSP Projects joins several infrastructure and construction firms that went public in the past 18 months. These include Shankara Building Projects Ltd, Sadbhav Infrastructure Project Ltd, PNC Infratech Ltd, MEP Infrastructure Developers Ltd and Dilip Buildcon Pvt. Ltd. Delhi-headquartered GR Infraprojects Ltd is planning to go public with an estimated IPO size of Rs 500 crore.

PSP Projects had filed its draft prospectus for an initial share sale on 29 December 2016. It received regulatory clearance on 24 March.

It raised Rs 211.65 crore via the IPO that comprised a fresh issue of 7.2 million shares and a secondary market sale 2.88 million shares from the company’s founders. The IPO resulted in roughly 28% stake dilution on a post-offer basis.

The eight companies that have listed on stock exchanges this year have raised close to Rs 6,000 crore from their IPOs. Calendar 2017 extends the good run after a blockbuster 2016 when fundraising by companies via initial share sales jumped to a six-year high of Rs 26,500 crore.

The IPO market in India picked up pace after four years of slow activity in mid-2014 when the BJP-led government took over. In 2015, 21 companies had raised about Rs 14,000 crore, as per stock-exchange data.

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