"This was a really disappointing performance, we were actually expecting the stock to close between Rs330-360," Anurag Purohit, research analyst with Religare Securities Ltd, said.
Reliance Power had announced in February it would give three bonus shares for every five held.
"Certain selling was expected, especially because of the run up the stock had witnessed post the announcement of the bonus issue, but it was certainly not expected that the stock will fall to the levels it did. Even in a worst-case scenario, we were expecting a closing of about the Rs280 mark," Purohit added.
"This will certainly trigger a panic among retail investors, and going forward, we can expect profit booking at every rise."
The stock closed at Rs235.85 on Bombay Stock Exchange (BSE), below the post-bonus cost of shares.
The bonus issue of three shares for every five held had brought down the cost of each Reliance Power share held to Rs269 for retail investors and Rs281 for institutions. The company had offered the shares at a discount of Rs20 to retail investors at Rs230 a share, as against a price of Rs250 for institutional investors.
The founder-promoters of the company, including Reliance Anil Dhirubhai Ambani Group (R-Adag) chairman Anil Ambani and Reliance Energy Ltd, who together held 90% of Reliance Power's equity, were not issued any bonus shares. The promoters, however, had acquired shares in Reliance Power at Rs17 each.
The company had set 30 May as the ex-date. Investors holding Reliance Power stock at the end of trading on 2 June will be given the bonus shares, the company said in a statement to BSE on 5 May.
The share sale of Reliance Power, India's biggest domestic initial public offering (IPO) thus far raising Rs11,700 crore, was sold out in less than a minute. But on the listing day, 11 February, the shares plunged and closed at 17.22% below the issue price of Rs450.
Meanwhile, R-Adag has another initial public offering in the pipeline. The group plans to offload a 10.05% stake in Reliance Infratel to raise Rs5,000-6,000 crore through the IPO.
"Raising money in the Reliance Infratel IPO, given the current market price of the Reliance Power share, is going to be challenging for the group as it has lost a lot of investor confidence since the listing of Reliance Power," said Arun Kejriwal, director, Kejriwal Research and Investment Services, a Mumbai-based advisory firm.
"He (Anil Ambani) has tried everything possible to regain investor confidence since. He will have to pull another rabbit out of the hat to make the Reliance Infratel offering successful."
Reliance Power plans to set up 13 plants with 28,200MW of generating capacity. Seven of these will start operating in the first five years, with the first plant in the line-up starting production in 2009.
"There are no fundamentals to judge the performance of the company as of now, so it is very difficult to know how the stock will react going forward," said an analyst with a domestic brokerage, who did not wish to be identified.
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