T K Ananth Kumar, Director - Finance, Oil India in an interview to CNBC-TV18, said overall the OFS saw a good participation from all segments. It was 2.6 times over subscribed, so it can be called an overall success, he added.
The road show as part of our investor interaction has been extremely successful. The response has been overwhelmingly encouraging.
TK Ananth Kumar
The Oil India offer for sale (OFS) has been fully according to both the stock exchanges. There is news that it has raked in about Rs 3,100 crore. The government was hoping to sell 6 crore shares, about 10 percent in Oil India to rake in Rs 3000 crore.
This is the government’s third disinvestment this fiscal. The government has a target to raise Rs 30000 crore, so next on the block is going to be NTPC. The EGoM we understand will be meeting next week.
TK Ananth Kumar, Director-Finance, Oil India in an interview to CNBC-TV18, said overall the OFS saw a good participation from all segments like foreign institutional investors (FIIs), local institutions, retail, and high net worth individuals (HNI). It was 2.6 times over subscribed, so it can be called an overall success, he added.
The indicative average price he said was around Rs 517.99. Since they have adequate cash reserve, they won’t be going in for any fresh equity at the moment, he asserted.
Below is the edited transcript of his interview on CNBC-TV18
Q: Oil India OFS has been a hit, if you can take us through the details and the indicative price?
A: It is an overwhelming success. We have got 15.41 core shares at an average price of Rs 518. There has been demand from foreign institutional investors (FIIs), local institutions, retail, and high net worth individuals (HNI). It has been a good participation from all the segments. Overall, we are happy and satisfied; certainly it can be called a very successful OFS.
Q: I understand that the indicative price is higher than the reserve price of Rs 510 a share. Could you shed some light on that?
A: The indicative price average has been Rs 517.99. So, close to Rs 518.
Q: You sell about 15 crore shares so that is more than a subscription of over two times?
A: Yes 2.6 times. 15.41 crore share have been subscribed.
Q: Totally how much has been mapped up?
A: Around Rs 3113 crore.
Q: After seeing this OFS issue going through, you don’t really need cash now but seeing this do you now have any plans of perhaps issuing fresh equity, going in for any fund-raising activity. This has been purely a disinvestment by the government?
A: We have adequate cash reserve available with us. So, we don’t think we will be going for any equity issue at the moment.
Q: If you can also shed some light on the road show that you went through because it is critical to get an understanding of the oil sector. There have been plenty of positive cues that have come in recently for the oil sector, for example we have seen partial deregulation of diesel. Dr Rangarajan has submitted a report which now talks about USD 8 gas price for administered pricing mechanism (APM) gas. Anything that you are picking up from the government on that front, what your future gas price is going to be?
A: The road show as part of our investor interaction has been extremely successful. The response has been overwhelmingly encouraging. The business plans, performance, strategy etc presented by the company has been very well appreciated. Of course they had concerns regarding the subsidy sharing and lack of clarity on the same but considering the recent reforms introduced right from September we have given them adequate comfort that government is proceeding in the right line to reduce the under recovery.
Q: These days we are seeing a kind of tug of war between the finance ministry and the oil ministry on the pricing of petro products, whether it should be export parity, trade parity. Can you tell us what the subsidy burden for this fiscal is going to be? Have you received any communication from the government? You did provide USD 56 a barrel realisation, you did that on a provisional basis so any clarity you have got from the government?
A: We have been given to understand that this USD 56 per barrel shall be the applicable subsidy burden of upstream company. So, taking USD 56, our burden should be around Rs 8000 crore.
Q: How much will the total upstream burden be for FY13?
A: As a percentage it is about 36.5 percent but this year it has been per barrel 56 on production. So, our share should be around Rs 8000 crore.
Q: Your realizations are about USD 109 a barrel, do you expect that to continue in the last quarter as well?
A: Yes the current crude price is ruling around USD 114-115 per barrel. So we certainly expect Q4 realisation should be at least equal to first nine months.
Oil India stock price
On September 17, 2014, Oil India closed at Rs 631.50, up Rs 1.25, or 0.20 percent. The 52-week high of the share was Rs 668.80 and the 52-week low was Rs 432.90.
The company's trailing 12-month (TTM) EPS was at Rs 53.63 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 11.78. The latest book value of the company is Rs 344.48 per share. At current value, the price-to-book value of the company is 1.83.
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