April 4, 2018 / 7:45 AM / 6 months ago

UPDATE 1-India's ICICI Securities makes tepid debut after $541 mln IPO

* ICICI Securities shares fall as much as 16.3 percent on listing

* State-run Mishra Dhatu Nigam about a percent down from IPO price

* India’s IPO market has cooled after record fundraising in 2017 (Adds details, background, Mishra Dhatu listing)

By Swati Bhat and Devidutta Tripathy

MUMBAI, April 4 (Reuters) - Shares in India’s largest equity broker, ICICI Securities Ltd, fell as much as 16.3 percent on their market debut on Wednesday, reflecting weak sentiment around the firm’s initial public offering (IPO) last week that raised a lower-than-target $541 million.

The stock pared some losses to trade 13 percent down at 456.35 rupees by 0719 GMT, compared with its IPO issue price of 520 rupees.

Indian state-run special steels and alloys maker Mishra Dhatu Nigam Ltd, which also began trading on Wednesday after its IPO raised the government 4.33 billion rupees ($66.6 million), was 0.7 percent lower at 89.40 rupees. The stock fell as much as 4.3 percent.

India’s IPO market has cooled after a fall in the main stock indexes from record-high levels in late January. Eight companies raised more than $2 billion through IPOs in March but most of their stocks fell on trading debuts.

The IPOs of ICICI Securities and state-run military aircraft maker Hindustan Aeronautics Ltd also failed to attract full subscription, dampening sentiment toward first-time share sales after a record $11 billion IPO fundraising last year.

In ICICI Securities’ IPO, India’s third-biggest lender ICICI Bank Ltd - which had initially planned to sell a stake of around 24 percent - managed to sell 20.8 percent of the unit that also provides investment banking services.

Analysts said investors had balked at the IPO’s high valuation, which brokerage Centrum estimated to be priced at nearly 50 times the firm’s 2016/17 earnings and more than 34 times its book value.

“There were some concerns on valuation and with the market not doing well overall, we have seen a muted market debut,” said Jagannadham Thunuguntla, a senior vice president at Centrum. He said he expected the stock to recover with the company’s strong financials and vast digital footprint.

“At this moment the markets are at a crossroads, and we need to see how the situation evolves going ahead but there are several companies looking to raise funds,” he said on the pipeline of IPOs. ($1 = 64.9750 Indian rupees) (Reporting by Swati Bhat and Devidutta Tripathy)

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