Rs 270 expected floor price for ONGC auction: Tulsian

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Rs 270 expected floor price for ONGC auction: Tulsian

SP Tulsian of sptulsian.com tells CNBC-TV18 that he expects the floor price for the ONGC divestment auction to be determined at Rs 270.

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SP Tulsian of sptulsian.com tells CNBC-TV18 that he expects the floor price for the ONGC divestment auction to be determined at Rs 270. "Even if the auction gets postponed to the next financial year, I don't think one can expect a price of Rs 300 plus," he added.

At this floor price, Tulsian says that there will be demand from both foreign and domestic institutional investors. "I don't think that mobilising Rs 12,000 crore will really pose any problem at Rs 270 to Rs 275," he said.

Also read: EGoM okays divestment in ONGC, BHEL to follow suit in FY13

He further goes on to say that there are 90% chances the auction will come through this fiscal because of the fiscal deficit concerns and the government's need for money.

Below is an edited transcript of his interview with Latha Venkatesh. Also watch the accompanying video.

Q: Is there a slim chance of ONGC auction happening at all in the current year?

A: I am confident to the extent of 90% that ONGC auction will happen in this year because I don't see any reason for not going ahead with the divestment in ONGC. I don't think that one can really expect a price of Rs 300 plus in case of ONGC even if the auction gets postponed to the next financial year or maybe next three months or so. If you do it now, I think that you can realise the price of Rs 275. So considering the fiscal deficit and the need of the government to look upon or realise the money, I see 90% chances of ONGC going through.

However, the kind of opposition made by the heavy industries minister Praful Patel makes me believe that BHEL will not really get divested in this year. In fact, I am of the opinion that there is no justification for BHEL to divest now with a market cap valuation of close to about Rs 65,000 crore.

Q: If an ONGC disinvestment is made, will it get snapped up by institutions or can you make that comment only when the floor price is determined?

A: I am expecting the floor price to get announced at about Rs 270 and in fact I see a lot of appetite from the overseas as well as from the domestic institutional investors. I don't think that mobilising Rs 12,000 crore, which works out for 5% stake sale, will really pose any problem at Rs 270 to Rs 275.