Mumbai: Shares in Reliance Petroleum Ltd. started trade at Rs 100 on Thursday, up 67 per cent from an issue price of Rs 60 and beating market expectations.
The company, a unit of petrochemical giant Reliance Industries Ltd. that runs India's largest refinery at Jamnagar in western India, raised $600 million in April in an initial public offer of a 10 per cent stake.
The company's shares were trading at Rs 89 on the Bombay Stock Exchange at 0458 GMT, making it the 17th most valuable company with a market capitalisation of $8.9 billion.
Traders and analysts had expected the shares to begin trading above Rs 90 each. "The debut has been spectacular.
The Reliance brand name continues to shine for investors," said Sanjay Dutt, managing director of Quantum Securities. "They have by and large made strong gains. I expect the price to stabilise in the Rs 75-85 range."
Investors are betting on strong prospects for the refiner, underscored by US oil major Chevron Corp taking a 5 per cent stake for $300 million, with an option to buy additional 24 per cent.
The IPO, the latest in a wave of public offers in the booming market, was oversubscribed 50 times as investors were enthused by Chevron's stake, tax breaks for the project and Reliance Industries' track record.
"I assure investors that once again their trust will be rewarded," Chairman Mukesh Ambani told brokers after ringing the opening bell at the exchange. "RPL will become the sixth largest refiner of the world, and Jamnagar the refining capital of the world."
Reliance Petroleum is building a 580,000-barrels-per-day export-oriented refinery near Reliance Industries' unit in Jamnagar. It will take about 2-1/2 years to begin operations and could face tighter margins. It will gain from tax benefits given by the government and its ability can process cheap, low-quality crude oil to make high-value products.
This helped Reliance Industries' existing 660,000-bpd plant at Jamnagar achieve refining margins of $10.4 a barrel in January-March, twice as much as its domestic peers and higher than benchmark Singapore refining margins.
The IPO was handled by nine investment banks including Citigroup and the local joint ventures of Merrill Lynch and Morgan Stanley. The Ambani brothers -- Mukesh and Anil -- settled a long running feud last year by dividing the group's assets within the family. Elder Mukesh controls the flagship Reliance Industries, while Anil has the interests in telecoms, power, financial services and media.
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