Shares of Indian Oil Corporation (IOC) gained over 4 per cent on Tuesday – a day after government of India successfully offloaded 10 per cent of its stake from the company through an Offer For Sale (OFS).
Shares of IOC jumped 4.36 per cent to Rs 394.75. It opened at Rs 372.50 and touched a high and low of Rs 428.80 and Rs 366, respectively.
Although the OFS was fully subscribed, the response from foreign institutions and retail investors was tepid. Stock exchange data showed the non-retail book comprising institutional investors and high net-worth individuals bid for 27.85 crore shares against 19.42 crore shares on offer. The book was subscribed 1.43 times with a large portion of the bids coming from domestic institutional investors. The retail book was subscribed just 0.18 times.
IOC’s secondary market transaction was the fourth-largest OFS of all time. The Centre had raised Rs 22,557.63 crore by selling 10 per cent in Coal India in January 2015. The central exchequer had earlier garnered Rs 12,749.50 crore from ONGC in March 2012 and Rs 11,457.54 crore from NTPC in February 2013.
Monday’s stake sale in IOC was the second in last three years and the fifth sale by the government after it first divested stake in the state-owned refiner in FY1995 ― the then largest disinvestment offering of Rs 1,000-odd crore.
Harshad Borawake, vice-president research, Motilal Oswal Financial Advisors, said, “IOC will benefit from the ongoing reforms as deregulation of diesel prices would increase the profitability leading to higher Return on Equity(RoE). Further, lower interest rates would help all the oil marketing companies including IOC to improve margins on Diesel.”