Kicking off its disinvestment programme, the government on Friday mobilised around Rs 808 crore through its offer for sale in Hindustan Copper shares, largely aided by the good support extended by LIC and public sector banks.
The auction generated bids for 51.61 million shares, or 5.6 per cent of the capital, according to stock exchange data. The government had offered 37 million shares, but had the option to sell a further 51.71 million shares. The bids came at a weighted average price of Rs 156.56, slightly above the Rs 155 floor price. The government has decided to accept the entire number of shares bid at or above the floor price.
The offer for sale evoked poor response from the public in the opening session. But demand from LIC for an estimated Rs 350 crore and PSU banks including SBI which put in their bids later, bailed out the issue.
The offer price triggered a sell off in the price of the scrip in the secondary market. The shares fell 20 per cent hitting the floor of the trading band at Rs 213.05 on the Bombay Stock Exchange. The stock lost nearly Rs 4,900 crore in market cap in the process on Friday to Rs 19,711 crore. As the government owns 99.59 per cent of Hindustan Copper, the limited free float — shares available for trading in the public — had inflated the traded price of the shares.
“Although HCL is the only vertically integrated copper producer in India, the stock is currently trading at an expensive valuation due to low free float (0.41 per cent of its market cap). Even at a floor price of Rs 155, it is expensive compared to its peers,” Angel Broking said in a research note. The stock had zoomed by 11 per cent on Thursday ahead of the disinvestment.
The floor price of Rs 155 per share was at a 41 per cent discount to Thursday’s closing price of Hindustan Copper on the BSE.
The government plans to raise Rs 30,000 crore through PSU disinvestment in the fiscal year ending in March, but has managed just Rs 125 crore so far, through an IPO by National Buildings Construction Corporation. Weak market conditions have deterred public issues or auctions in recent months.
NMDC disinvestment likely by Dec 15
The government on Friday said disinvestment of its 10 per cent shares in NMDC is likely to take place in first