People’s car glides into market in style

Maruti, the original people’s car, has finally gone to the public—in grand style. The Maruti Udyog Limited (MUL) scrip roared int...

Maruti, the original people’s car, has finally gone to the public—in grand style. The Maruti Udyog Limited (MUL) scrip roared into the stock markets on Wednesday, making a debut at Rs 157, a 26-per-cent premium to its issue price of Rs 125 per share.

But the broad market was flat and Sensex fell by nine points with investors uncertain of the direction after strong recent gains.

The largest car maker in the country, which last month completed the largest initial public offering (IPO) in four years, surged as much as 32 per cent to Rs 164.90 within minutes of listing. ‘‘I was expecting a strong debut by Maruti… but the volume has surprised everyone. Some investors who got allotment sold the shares and booked the profit. But buyers outnumbered sellers,’’ says BSE sub-broker Pawan Dharnidharka.

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The stock then touched the high of Rs 170.25 in intra-day trades before settling at Rs 164.05, up 31.24 per cent over its issue price of Rs 125. Over 1.61 crore MUL shares were traded on the BSE and 3.51 crore shares on the NSE. Maruti was the top-traded share on the BSE with the highest turnover of Rs 267.07 crore followed by Infosys Tech at Rs 101.18 crore. The MUL initial public offer, which materialised late last month, was oversubscribed nearly 10 times. ‘‘The issue is expected to give a fillip to the stuttering privatisation programme and the stagnant IPO market. Maruti will give more depth and breadth to the stock market,’’ said stock dealer Venkat Aiyer.

The BSE organised the listing ceremony, where MUL chairman Shinzo Nakanishi, MD Jagdish Khattar, and director Kinji Saito rang the ceremonial gong to commemorate the historic occasion. The Maruti share was listed in the A group of the BSE, making it the first instance of a scrip being placed in A group right from day one of trading after IPO.

Japan’s Suzuki Motor Corp holds a 54.2-per-cent stake in Maruti, which has a 50-per-cent share of the domestic car market. ‘‘In Maruti, there was a strategic partner (Suzuki) and it had majority holding. When the IPO happened Suzuki had 54-per-cent stake. Due to this, investor had faith that it will not run with government culture. It was because of this that MUL succeeded,’’ said Disinvestment Minister Arun Shourie.

‘‘With a public issue oversubscribed more than 10 times, we are aware of the special place we have in this market and in this country,’’ says Khattar. Uday Kotak, chairman of Kotak Investment Banking said, ‘‘Maruti is an outstanding illustration of India’s success in a globally competitive industry. Its IPO has indeed created history. The retail response was unprecedented while the depth and quality of the institutional book was equally unmatched and rarely seen in Indian IPOs.’’