Mumbai: Deccan Aviation, a new entrant in the domestic airlines sector, failed to take-off as its stocks experienced brisk profit selling and plunged 34 percent on the first day of trading on Monday.
Deccan Aviation shares dropped to Rs 98 on the Bombay Stock Exchange in early trade, compared with the offered price of Rs 148 through the initial public offering (IPO).
The Banglore-based airline, which came in to mop up Rs 360 crore last month had to extend the subscription period for its IPO and cut the price.
The airline raised 16 percent less than it had originally targeted at Rs 430 crore.
Marketmen said the company stocks plummeted due to a bearish phase in the markets besides investors becoming wary of low fares and mounting losses of other airlines.
"The poor demand in the IPO explains it all," said an analyst of a leading broking firm.
"The timing of the IPO was wrong and the cut-throat competition in India shows that people do not want aviation shares," he added.
The share prices were moving lower at a time when the benchmark Sensex plunged by over 277 points at 9533.37, declining 24 percent since its peak on May 11.
Shares of rival airline companies such as Jet Airways declined 40 percent since its February 2005 sale of shares, and today quoted 1.1 percent lower at Rs 650.05. Spicejet shares also traded lower by Rs 2.75 at Rs 42.65.
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