Shares of PTC India Financial Services sank 11.4% on debut to close at Rs 24.90 on the National Stock Exchange Wednesday as there was little follow up buying in the stock.
Brokerage Way2Wealth said at Rs 28 a share, the issue was priced at 1.25 times its fiscal year 2013 book value. "This is in line with the value that the peers are trading at currently i.e. Power Finance and REC; thus there is hardly any upside available for the investors," it had said in its research report.
The total IPO size of PTC India Financial Services was 15.67 crore shares, of which 12.75 crore was a fresh issue by the company, and the remaining 2.92 crore offered by Macquarie India Holdings, an investor in the company. The issue was subscribed 1.7 times.
PTC India Financial Services, which is the non-banking finance arm of power trader PTC India, raised Rs 357 crore through the fresh issue of shares, and the funds will be used to strengthen its capital base and to meet future capital requirements.
Analysts say PTC India Financial Services faces stiff competition from other large banks and NBFCs, which have proven track record in the segment and also good clientele.
It is also heavily dependent on parent PTC India for its business growth and the high cost of borrowings of over 10% is also a concern, analysts say.
Deven Choksey, managing director, KR Choksey Shares and Securities, however, said there could be gains for investors in the long-term since infrastructure projects have longer gestation period.
"If you look at the investment model which this company brings along with financing activity, that is an interesting proposition for investors to know because if you are investing in infrastructure projects and those infra projects over a longer period of time starts giving you the benefits on capital appreciation side, I think that would be a fantastic game," he told CNBC-TV18.
PTC India Financial Services joins a lost of several companies that tapped the stock market in 2010-11, and have seen their shares getting hammered.
Shares of Orient Green Power, for instance, lost 4.9% over its issue price of Rs 47 on debut in October, and are trading almost 49% lower at Rs 24.30 as of close on Wednesday.
Tarapur Transformers has lost almost 69% since listing and Goenka Diamond and Jewels is down nearly 58%.
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