Mumbai: Oil India gained as much as 9.3 per cent on its trading debut on Wednesday after the state explorer's heavily subscribed $570 million IPO, potentially boosting government plans for selling stakes in other companies.
Analysts had expected Oil India's shares to rise 5-7 per cent and the better-than-expected listing will allay fears of waning investor appetite, following tepid market debuts for state-run hydropower producer NHPC Ltd and private utility Adani Power that had together raised $1.9 billion.
Oil India's initial public offering was subscribed more than 30 times, the third major Indian IPO this year and second by a state firm, as IPOs revived following an 18-month lull after share markets plunged in 2008.
Analysts had worried NHPC's muted debut would derail government plans to sell stakes in other companies as it tries to lift itself out of a yawning fiscal deficit and raise money to fund expansion in Asia's third-largest economy.
"Oil India is one of the options in an otherwise under-represented crude oil sector in the country because of which several funds are picking it up," said Rajesh Jain, chief executive of Pranav Securities.
"And if crude oil prices rise then those gains will flow into the stock. This is one of the stocks which wasn't fully priced and appears to be a safe bet."
At 0529 GMT, shares in the oil and gas explorer were up 7.7 per cent at 1,131 rupees, compared with the IPO price of Rs 1,050 or the top end of the indicated band.
The stock touched a high of Rs 1,148 after having made a debut at Rs 1,105. India's benchmark BSE index was up more than 1 per cent.
The firm expects capital expenditure of Rs 4500 crore ($935 million) over two years with 60 per cent going towards exploration and production, Chairman N.M. Borah told reporters, after the stock market debut.
Oil India, which also produces liquefied petroleum gas, had estimated, proved and probable crude oil reserves of about 575.4 million barrels as of March 31, 2009.
The company, which mainly operates in India, is also exploring crude oil and natural gas in Egypt, Gabon, Iran, Libya, Nigeria, Timor Leste and Yemen.
JM Financial, Morgan Stanley India, Citigroup Global Markets India and HSBC Securities and Capital Markets were the lead managers to the IPO.
Indian firms have raised $15 billion in share sales so far this year, surpassing 2008 volumes, helped by a 75 per cent rally in the BSE index this year.
