Feb 07, 2013, 12.01 PM IST
The government has set the NTPC offer for sale (OFS) floor price at Rs 145 per share. That after the Empowered Group of Ministers (EGoM) yesterday approved which will be held tomorrow.
The divestment secretary had said that the government is looking to raise a whopping Rs12000 crore from the NTPC stake sale. The government will sell a 783.26 million shares or 9.5 percent stake in NTPC through the single-day auction. Ahead of the share sale, NTPC shares closed at Rs 151.80 on Wednesday, down 2.4 percent on the BSE.
Experts are divided on whether the NTPC OFS will now garner significant FII interest.
According SP Tulsian, sptulsian.com , the price is too aggressive. "If you really go by the track record of the older issues, you know, generally the ball park has been set at 5%. That means either the government is too confident that there's going to be a strong appetite, or they may have made some bad calculation, or the back arrangement where LIC and all will come to the rescue for subscribing this issue. But, yes, Rs 145 per share seems to be quite aggressive and I don't think the FII response will really be that good,” he explains.
However, Prithvi Haldea, chairman and managing director, Prime Database differs that there could be FII appetite because the quantity on offer is substantial. "We are talking of 78 cr shares and there would be long-term institutions who may like to come in and bid for large quantities because at this price, definitely the stock looks reasonably attractive. But it's not a great investment opporutnity from a trading point of view or an arbitrage point of view where you buy today and sell tomorrow," Haldea elaborates.
NTPC stock price
On December 11, 2013, NTPC closed at Rs 139.30, up Rs 3.30, or 2.43 percent. The 52-week high of the share was Rs 167.25 and the 52-week low was Rs 122.65.
The company's trailing 12-month (TTM) EPS was at Rs 14.55 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 9.57. The latest book value of the company is Rs 97.49 per share. At current value, the price-to-book value of the company is 1.43.
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