Last Updated: 27th Apr, 2026
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In November 1977, Shri Dhirubhai Ambani priced his company's first IPO at 10-face value, no premium.
Brokers said he was leaving money on the table. They didn't see what he was actually doing.
Reliance Textile Industries needed capital to expand.
Banks were not lining up.
Institutional money came with conditions he did not want.
So he did something nobody serious in 1977 was doing. He went to the public.
But not just the Bombay public.
He sent his agents to small towns across Gujarat.
Towns where nobody had ever held a share certificate. Towns the establishment had never bothered with.
And he priced the issue at face value.
No premium. No clever pricing to extract the most rupees per share.
Just ₹10.
The Issue was Oversubscribed Seven Times
About 58,000 strangers, most of them first-time investors, mailed in their cheques and waited weeks for share certificates to arrive by post.
Within twelve months, the share hit ₹50. By 1980, ₹104. By 1982, ₹186.
Now Here is What the Brokers Missed
Dhirubhai didn't price low because he didn't know any better.
He priced low because he understood something most promoters don't understand even today.
The first time you take money from the public, the public has to make money. Otherwise there is no second time.
Look at what he built on top of that single decision.
By 1985, four million Indians owned Reliance shares.
Convertible debentures became his next instrument - one the Indian market had barely seen before.
AGMs moved to stadiums. The Financial Times called one of them the largest corporate AGM in the world.
Every one of those later rounds of capital was possible because the first round had delivered.
The Lesson is Still there, Fifty Years Later
When you evaluate a promoter today any promoter - the question is not whether he is making money.
The question is whether he is making money for his shareholders BEFORE he asks them for the next round.
That single test tells you more than any management commentary, any analyst report, any quarterly call.
Reliance, Infosys, HDFC, Asian Paints - every long-term wealth creator in this country has the same DNA.
They built the relationship before they extracted from it.
A thousand other companies did one IPO and never built the trust to do another.
Dhirubhai read capital markets as a relationship a decade before regulators read them at all.
Capital is not a transaction. It is a feedback loop.
Read your promoters that way. Your portfolio will tell you the rest.
About the Author
Amar K Ambani is Executive Director at YES SECURITIES
