As Inox Wind’s initial public offer (IPO) opened for subscription on Wednesday, investors lapped up peer Suzlon Energy, driving the stock up by 10.9% to a nine-month high of Rs 29.50. Analysts said investors are betting that Sun Pharma’s billionaire founder Dilip Shanghvi, who picked up a stake in Suzlon recently, may drive a turnaround in its fortunes. Brokers said the rise in the unofficial grey market premium for Inox has boosted sentiment in Suzlon too.
Grey market rates give investors an idea of the levels at which they expect the stock to list. “Suzlon Energy stock is rising due to the rub-off effect of Inox Wind IPO,” said Mehraboon Irani, principal and head-private client group business at Nirmal Bang Securities. Investors largely shunned Suzlon between 2008 and 2014 as the company was weighed down with debt woes. But, with Suzlon aggressively looking to reduce debt by selling assets and Shanghvi buying a stake in the company, the stock has more than doubled in the last one-anda-half months. The government’s focus on alternative sources of energy has also sparked investor interest in the sector.
“I would recommend investors to buy Suzlon Energy because the company has worked very hard to reduce its debt and Dilip Shanghvi’s investment into the company has provided a huge boost,” added Irani. Inox Wind’s IPO, which opened on Wednesday, was subscribed 0.16 times. The company is planning to raise Rs 1,000 crore. “One should always remember that in a bull market an IPO is always fully priced. hence the upside for Inox Wind is limited post listing,” Irani added. “I would say valuation of valuation of Inox Wind based on IPO price band is definitely expensive when compared to Suzlon Energy,” said P Phani Sekhar, fund manager at Karvy Stock Broking.