Shares in Indian drug maker Indoco Remedies Ltd. surged 67 percent at their debut on the Bombay exchange on Friday, reflecting strong investor appetite for issues from a growing sector, brokers said.
Investors, who did not get the shares they wanted at the initial public offer (IPO) that was oversubscribed 60.7 times in December, were chasing the stock, analysts said.
Indoco shares opened at 410 rupees, against the offer price of 245 rupees. The stock rallied as much as 79.6 percent to 440 rupees in a slightly weak market, and was trading at 415.50 rupees at 12:35 p.m.
At the day's high the company is valued at about 5.2 billion rupees.
The Bombay-based company's IPO had raised 735 million rupees by selling a 25.38 percent stake. It had priced the offer at the upper end of a pre-determined band of 220-245 rupees.
On Thursday, the company said profit after tax in the past December quarter nearly trebled from a year ago to 70.48 million rupees, while net sales rose 15.2 percent to 428.5 million.
The proceeds from the IPO would be used to set up a formulation plant in Himachal Pradesh and a research and development centre.
Based on the first half earnings, analysts estimate the company to report earnings per share of about 30 rupees for its financial year to June, 2005.
That takes the forward price to earnings (P/E) multiple to 14.6 at the day's high of 440 rupees. Its peers such as Lupin Ltd. trades at a forecast P/E of about 16.