A second round of offer for sale (OFS) in Coal India Ltd could be in the offing in 2016-17 along with a similar sale in NBCC Ltd.
Karvy Stock Brokers feels that these could be part of a Rs 40,000-50,000 crore disinvestment target that the Finance Minister, Arun Jaitley is likely to announce in Budget 2016.
“We are expecting one more offer for sale from Coal India in 2016-17,” Karvy says. It has pointed out after the offer for sale in January 2015, the stake of government has reduced to 79.65%.
As per the minimum public shareholding norms, government cannot hold more than 75% stake in Coal India. Hence, the government needs to dilute at least 4.65% stake further through one more offer for sale. “Even though there is time until Aug 21, 2017 to meet this requirement, one may expect Coal India offer for sale in the upcoming financial year 2016-17 itself,” Karvy says.
In January 2015, the government had offloaded 10% stake CIL offering 63.16 crore shares. The offer was at Rs 358 a share as the floor price and a 5% discount for the retail investors. Through the sale, the Government had mopped up Rs 22,558 crore. CIL was trading at Rs 313.90 on February 22, 2016.
Similarly, in the case of NBCC where the government holds 90% it has to reduce its stake to 75% by Aug 21, 2017. Hence, the broking house expects disinvestment to the tune of 15% in NBCC as well.
Karvy feels that the divestment exercise would begin early in the financial year 2016-17. “In the next financial year, we hope that the government will commence the activity of disinvestment starting from the financial year, instead of keeping it delayed up to last quarter as it had been done in the previous years. Further, it is expected that government will keep several disinvestment options, including strategic sale, open to achieve the disinvestment target,” it says in a report.