The 5,800 crore share sale in state miner NMDC was fully subscribed (1.03-times) at an indicative price of Rs 149.09 on Wednesday. The government was selling 39.65 crore shares, or 10 percent of the company's stock, and had set a floor price of Rs 147 per share for bids.
The government is likely to raise over Rs 5,900 crore via the offer for sale scheme.
The share sale received bids for 41.17 crore shares against 39.65 crore shares on offer. The successful share sale is an encouraging sign for the government's efforts to divest stakes in other state firms to bridge its rising fiscal deficit.
Most analysts were positive on the stock. Prasad Baji, senior VP (institutional equities-research) at Edelweiss Securities said there's 10-15 per cent upside in the stock considering that it is priced at a discount. Cash rich balance sheet and low iron-ore cost are advantages though stagnant volume growth continues to be a challenge, he added.
Steel companies like JSW Ispat and Tata steel also bid for shares, sources told NDTV.
Shares of NDMC closed 3.2 per cent lower at Rs 154.25 on the BSE. The broader Sensex declined 0.16 per cent to 19,355.
The share sale is the largest by the government since a messy $2.5 billion auction of shares in state explorer Oil and Natural Gas Corp in March that had required large bids from state investors.
(With inputs from Reuters)