Investors gave the cold shoulder to NMDC’s follow-on public issue on the first day.

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The issue that closes on Friday received bids only for 17 per cent of 33.22 crore shares on offer.

But NMDC finance director S Thiagarajan was not too worried.

“It (the response) is not bad. The follow-on public offer has got subscribed 17 per cent at the end of the first day. We expect it to reach the 60 per cent mark by Thursday. Normally, that is the pattern in FPOs. It is usually the last day that the major investors and FIIs line up. Also, please remember that this FPO is big, three times the size of REC and two times NTPC. So let us wait for Thursday,” he said.

At the higher end of the Rs 300-350 price band, the offer would garner around Rs 11,550 crore. This will make it the second highest public issue in the country after Reliance Power’s and the biggest among public sector companies.

“The pricing is definitely lower than expected and that is why secondary market prices crashed on Tuesday. The issue would definitely see good response in the last two days. The company should garner somewhere around Rs 11,000 crore,” said Pramod Shinde, research analyst, Asian Industry and Information Services.

Market experts are split on the pricing of the issue.

“We are asking investors to subscribe to the issue as it is a long-term play. We think it is attractively priced, wait and watch

for the closing bids on the last day,” Alex Matthew, head of research at Geojit BNP Paribas Financial Services, said.

SMC Capital head of equity Jagannadham Thunuguntla begs to differ.

“The issue is overpriced even at the lower end. I think yet again public institutions like LIC will come to the rescue as it happened in the case of NTPC and REC (issues),” he said.

Arun Kejriwal, head of Kejriwal Research and Investment Services nods in agreement. “The issue is expensive and despite the 5 per cent discount for retail investors it would receive a tepid response. It seems public institutions need to chip in once again,” he added.

Broking firm Angel Securities has recommended investors to avoid the issue citing impending reviews of the company’s pricing agreements with customers.

“Five-year pricing contracts with domestic players are ending in March 10, while the export contracts are due for revision in April 11,” the brokerage said in a note to clients.

“In terms of valuation, the stock is offered at around 35-41 times its FY10 EPS and 16-19 times EV/EBITDA, which is at a substantial premium to its domestic and global peers,” Sharekhan said in a separate note.

Shares of NMDC closed Wednesday at Rs 379.85, up by 1.12 per cent or Rs 4.20, on the Bombay Stock Exchange.