The Offer for Sale (OFS) for the government's 10 per cent stake in explorer Oil India was fully subscribed, according to provisional data from stock exchanges. By 2.59 p.m., the offer had received bids for 75 million shares at an indicative weighted average price of Rs 518.04 per share. Final bid numbers will be available later.
"The pricing is attractive so we should get good response," TK Ananth Kumar, CFO of Oil India, told NDTV Profit earlier.
Shares in Oil India traded 2.23 per cent lower at Rs 527 on the Bombay Stock Exchange as of 3.10 p.m. on Friday. The offer was fully subscribed, according to the latest reports, and the indicative price was Rs 518.04.
The floor price for the Oil India auction has been set at Rs 510 a share, a 5.6 per cent discount to its Thursday closing price of Rs 540. At the floor price, the government could raise about Rs 3,000 crore or $575 million through the stake sale.
"The sale price is at a 10-15 per cent premium to Oil India's share price six weeks back, but the auction should go well," market analyst Ambareesh Baliga said.
OIL shares have been on fire ever since the government started considering partial decontrol of heavily subsidized diesel prices.
The government holds 78.43 per cent stake in the company and its stake will come down to 68.43 per cent post the auction. OIL's paid-up capital as on March 2012 was Rs 601 crore. The company, which has an employee strength of 8,096, listed in 2009.
The auction is part of the government's divestment strategy to raise Rs 27,000 crore by selling shares in profitable state-run firms by March 2013.
Historically Oil India and ONGC, both state-run upstream companies, have traded in a band of 7-12-times price earnings multiples. At Rs 510, Oil India trades at 7.98 times FY14 PE as compared to ONGC's valuation at 9.95-times forward PE.
Oil India has been underperforming ONGC since mid- December mainly on account of the share sale overhang. The 5 per cent discount is seen as attractive by the Street.
Disinvestment target lowered:
The government is likely to raise Rs 27,000 crore through sale of its stake in state-run companies, 10 per cent lower than the initial target for the current fiscal year ending in March, Disinvestment Secretary Ravi Mathur told reporters on Thursday.
This is the third disinvestment this fiscal year. The government has so far raised Rs 6,900 crore through disinvestment in the current fiscal year.
In March last year, the government had fixed a target of Rs 30,000 crore through partial privatisation of state-run companies during this fiscal year.
(With inputs from agencies)