The stock fell to a low of 450 rupees in early trade after opening at 477.25 rupees. Its initial public offer (IPO) price was at 505 rupees.

The benchmark Nifty 50 was down 1.3%, while the more domestically-focused mid-cap and small-cap stocks declined more than 2% each. [.BO]

Investors bid for about 206.3 million IRM Energy shares by the final day of subscription, 27.05 times more than the 7.6 million shares on offer, exchange data showed.

"The IPO was well-received by investors and oversubscribed. However, the current market condition could be a reason behind a poor listing," said Shivani Nyati, head of wealth at Swastika Investmart.

The company, with a diversified customer portfolio and distribution network, is well-positioned to benefit from the growing demand for natural gas in India, Nyati added.

The IPO of IRM Energy, a group company of Cadila Pharmaceuticals, comprised of fresh issue of 10.8 million shares worth 5.44 billion rupees, according to the prospectus.

The company plans to use about 3 billion rupees of proceeds from the IPO to fund the development of the gas distribution network in Namakkal and Tiruchirappalli in the southern state of Tamil Nadu.

The Ahmedabad-based company builds, operates and expands the gas distribution network for industrial, domestic and automobile customers.

HDFC Bank and BOB Capital Markets were book-running lead managers for the IPO.

So far this year, 173 Indian companies have gone public, raising $4.46 billion, compared with 115 companies that raised $6.06 billion in the same period last year, according to LSEG data.

($1 = 83.2325 Indian rupees)

(Reporting by Rama Venkat in Bengaluru;Editing by Nivedita Bhattacharjee and Eileen Soreng)

By Rama Venkat