New Delhi, Nov. 25: The government may cross the divestment target of Rs 30,000 crore this fiscal, if there are no stock market crashes.
Led by this cautious optimism, the department of divestment is looking forward to the upcoming selloffs. While the Hindustan Copper share sale mopped up around Rs 800 crore on Friday, the expected proceeds from the sales of four more PSUs this fiscal — NMDC, MMTC, Oil India and NTPC — should be sufficient to cross the target.
In the first half of December, the government will offload a 10 per cent stake in iron ore miner NMDC. With a market cap of just over Rs 66,000 crore as on Friday, the state-run miner can fetch the government about Rs 7,000 crore.
Last month, the government approved the offer for sale (OFS) route, or the auction method, for the NMDC selloff. Around 39 crore equity shares with a face value of Re 1 will be offered to investors.
The stock is expected to sell closer to Rs 180 a share under the auction route. NMDC’s 52-week high and low have been Rs 206.35 and Rs 136.15, respectively.
“The NMDC divestment should be in the first fortnight of December... They have estimated about Rs 7,000 crore. Let’s see,” divestment secretary M. Haleem Khan said.
Analysts feel the stock markets will remain choppy because of the uncertainties in the West as well as local policy issues, but are unlikely to collapse like last year as the global economy is on the mend.
Oil India Ltd is expected to be the next off the block in late December.
“The government’s shares will be sold through the auction route. There will be a reserve price and bids will be invited and shares allotted on a pro-rata basis,” officials said.
The government owns 78.43 per cent in Oil India, which will come down to 68.43 per cent after divestment. With a market cap of about Rs 27,000 crore, this share sale is expected to fetch only about Rs 2,800 crore.
The next big-ticket divestment is likely to be that of metal trader MMTC in January or February. The government wants to sell about 9.33 per cent in the firm, or about 9.33 crore shares of face value of Re 1 each. The shares are trading at about Rs 690 apiece. Its 52-week high and low ranges between Rs 1,009 and Rs 438.55. The selloff is also expected to fetch about Rs 7,000 crore, according to officials in the divestment department.
The biggest sale will be that of power utility NTPC, also slated for January-February. The government will sell about 78.33 crore shares, or a 9.5 per cent stake, in the state-run utility.
At present, the government holds about an 84.5 per cent stake in NTPC.
NTPC shares closed at Rs 159.50 on Friday after trading at a day’s high of Rs 167 apiece. The stock’s expected to edge towards its 52-week high of Rs 190 a share as the date of share sale nears.
At a conservative Rs 170 apiece, the NTPC divestment is expected to fetch the government over Rs 13,000 crore, according to merchant bankers.