Mundra shares surge on listing debut

Written by David Tran Thursday, 29 November 2007 07:57

THE Rs10 ($0.26) face value share of Mundra Port and Special Economic Zone Ltd made its debut on the Bombay and National stock exchanges earlier this week at a premium of 75% against the issue price of Rs440.

The final price of Rs962 on the BSE on the first day of listing gained Adani group chairman Gautam Adani instant entry into Forbes magazine’s list of billionaires.

The counter opened at Rs770 on both the exchanges, gaining for the 45 year old Mr Adani and his younger brother Rajesh a windfall of $4bn in a matter of 20 minutes.

The share touched a high of Rs1,150 on the BSE and Rs1,050 on the NSE during intra-day trading, and a low of Rs770 before closing at Rs963. It meant that, by the end of the day, the two brothers’ notional wealth had swelled by a staggering $8bn.

While merchant bankers appeared to have valued the MPSEZL stock in a conservative manner, the market gave it the thumbs-up as it is the only listed stock in India from the port and trade zone sector. All of India’s 12 major ports are owned by the government, and are not listed, while top private ports like Pipavav, Kakinada and Kulpi have not yet approached the investing public.

Analysts were hence expecting the stock to open at a premium. "Ports is a fancied sector; there is a scarcity value attached to it," said M A Annamalai of Mumbai-based securities firm Akshaya & Co. "It is a stock that would be preferred by long-term institutional investors like pension funds and insurance companies."

Said Deven Choksey of K R Choksey Securities, "The scarcity value seems to be attracting a good number of people to Mundra Port. With its unique business model and the SEZ adjacent to it, the port’s good connectivity and locational advantage make it a long-term bet."

Another reason for the high valuation is because the Adanis are estimated to be holding the largest `land bank - undeveloped real estate - in Gujarat.

The issue itself has been heavily over-subscribed - to the extent of 116 times - and raised Rs1.8trn.

Speaking on the sidelines of a press conference, MPSEZL’s executive director Ameet Desai expressed satisfaction at the listing price and added, "We are now looking at raising Rs12bn through borrowing for a coal processing terminal that is to be on the balance sheet of the company."

The company will utilise the proceeds from the issue to expand its infrastructure base, which include a 30 million tonne coal terminal that will handle coal for Tata Power and Adani Power.

Part of the proceeds will also be used to set up special economic zones and expand the facilities of Adani Logistics, which has entered the container train operating business.