Raising questions over high valuations of IPOs, oil and gas exploration major Cairn India Ltd — which raised over Rs 5,000 crore through a mega IPO — made a disappointing debut at the bourses and plunged 14 per cent over its issue price at the close of trading.The shares of the company closed at Rs 137.50 on the Bombay Stock Exchange and settled at Rs 137.40 on the NSE much lower than its issue price of Rs 160. It had listed at a discount of 12.5 per cent on the BSE. Over 3.26 crore shares changed hands.“Investors who bought shares in the IPO are sitting on losses now. Issuers should be more careful about the valuation of IPO shares. Otherwise, it will affect the primary market sentiment,” said a BSE dealer. “It’s merchant bankers who should be taken to the task for high valuations.”Commenting on the weak start, Cairn Energy’s CEO Rahul Dhir told reporters that the company’s strong fundamentals were not reflected in the prices. “The current price does not reflect the strong fundamentals of the company. We will increase our production almost 5-fold by 2010 and we have very good fields with us,” Dhir said.Cairn’s IPO, which closed on December 15 was over-subscribed by 1.14 times. However, there were reports about some shareholders withdrawing their bids towards the end of the bidding process as well as after the completion of the IPO book building procedure.
