Mahindra Group chairman Keshab Mahindra (left), vice-chairman Anand Mahindra and Kotak Mahindra vice-chairman Uday Kotak (right) in Mumbai on Monday. (PTI)

Mumbai, Aug. 28: After a spell of bad listings, there seems to be some hope for companies planning maiden offers for the primary market.

Air Deccan and Prime Focus were among the hard-hit companies who had to extend their IPO period to make up for the lukewarm response.

However, Tech Mahindra’s listing, which closed the day at more than 51 per cent premium, has brought some relief to the IPO market.

Tech Mahindra, the telecom software services arm of Mahindra and Mahindra, closed the day on the BSE at Rs 552.80, with volumes of 82,30,292 shares. It touched an intraday high of Rs 569 and an intraday low of Rs 523. On the NSE, the share ended at Rs 553, with volumes of 1,51,66,163 shares. It touched an intraday high of Rs 569 and an intraday low of Rs 502. The share did not go below Rs 500 during the session.

The IPO, launched in early August, was oversubscribed 78 times and was priced at the upper end of the Rs 315-Rs 365 band.

Sector analysts point out that the IPO has done better than expected.

“We will not be surprised if the stocks hit Rs 700. It is a good company and has a sound management. Besides, one must also understand that only 12 per cent of equity has been floated in the market, the rest is still with the management,” said Rajeev Ramchandani, analyst, Religare Securities.

“We are very pleased with this response and now we have to keep up with the expectations of the shareholders,” Tech Mahindra chairman Anand Mahindra told reporters.

Mahindra & Mahindra holds 51 per cent in Tech Mahindra. Telecom firm BT has a 36 per cent stake in the venture, which will drop below 30 per cent in three to five years after employees exercise their stock options.

The qualified institutional buyer (QIB) portion of the issue was oversubscribed 103.98 times, the high networth individuals (HNI) category was oversubscribed by 123 times and the retail category was oversubscribed by 7.58 times.

The IPO offered 12,746,000 shares of Rs 10 each, including a fresh issue of 3,186,480 shares and an offer for sale of 9,559,520 shares by Mahindra and Mahindra and British Telecommunications Plc. Around 1,158,790 shares were reserved for eligible employees — which opened for subscription on August 1, 2006 and closed on August 4, 2006.

The issue constituted 11 per cent of the post-issue paid-up capital of the company.

The net issue constituted 10 per cent of the post issue capital.