Tomorrow when government’s divestment drive will be kicking off with Hindustan coppers the floor prices are going to be sorted at Rs 155 per share. SP Tulsian, sptulsian.com maintains his view on Rs 150 because it gives a market cap close to Rs 15,000 crore and that is why he has taken it as a benchmark.
Below is an edited transcript of the interview on CNBC-TV18
Q: 24 hours ago you said you fear that there will not be any significant discount and for the OFS issue to be a success you would want the floor price to be around Rs 150 a share and this has already happened. So, are you now going to change your view?
A: Yes, I have been maintaining my view that I don’t see a value beyond Rs 150 per share because that effectively gives a market cap close to Rs 15,000 crore. This indicates that the wise counsel has prevailed with the government because in the past we have not seen this kind of approach being adopted. This is because the ministry was more fearful that it will be seen as a criticism that the jewels have been sold at a throw-away-price.
Without considering that or maybe the investment banker has been able to impress the ministry that there is no value beyond Rs 150. That is why I have been taking it as a benchmark or as a fair value.
Now, this seems to be the fair value. At this level, we will see the genuine participation of the actual investors in the market and the government may not fallback or look upon LIC to bail-through or to subscribe the entire 4 percent stake. So, this seems to be a very positive and pragmatic move by the government.