Yet another round

NTPC has launched roadshows to attract potential investors to its public issue for partial sale of government stake in the company. The government is expected to mop up R12,000-13,000 crore by selling a 9.5% stake in the power generation major.

The government's disinvestment programme in the previous fiscal was a lacklustre affair, with the actual mop-up falling well short of the halfway mark of the target. There is huge pressure on the finance ministry officials to meet the target this time given the urgency of containing the fiscal deficit.

So far, the government has raised just R7,000 crore from stake sales in Hindustan Copper and NMDC against the annual target of R30,000 crore. With just two months left in this fiscal, the success of NTPC's issue will be crucial to meeting the government's target for this year.

Competitive pricing was a key factor behind the success of NMDC’s follow-on offer in December. The market expects discounts in sales of NTPC’s stock too. It has already conveyed this message by hammering down the NTPC shares.

The cabinet granted its nod for stake sale in the company on November 22. NTPC's share had closed at R163.70 a piece on that day on the BSE. The next day, the share closed at R159.50 a piece on expectations of discounts in the company’s FPO. Price for NTPC’s share remains depressed since then.

But in contrast with its lacklustre stock market performance, NTPC's physical and financial achievements remain impressive.

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