The CCEA today cleared government's sale of 49 percent stake in BALCO. In an interview with CNBC-TV18’s Nayantara Rai, market expert SP Tulsian and Ritesh Shah, Espirito Santo Securities shared their views on this development.
Below is the verbatim transcript of their interview on CNBC-TV18.
Q: The cabinet has approved the government selling 49 percent in BALCO. BALCO is an unlisted company but how much do you think the government can mop up from this exercise?
Shah: If we look at it from a profitability perspective, we expect them to do around USD 200-250 million. The right way to look at it will be on a asset scale given they have 245 and 325 kg of aluminum smelting capacity and nearly 2000 MW of power plant of which 1200 MW will be commissioned anytime soon. So, it will be more of asset based valuation rather than earning based multiples that one should look at for BALCO.
Q: Do you think this is going to be aggressively bid for in the open auction?
Tulsian: I don’t see that happening because if you see the equity structure now, 51 percent is held by Vedanta and 49 percent held by government and government is now going for residual stake sale; I don’t understand that why any investor will be interested. Whether that can be termed as a joint promoter, I don’t know. Vedanta has already offered USD 487 million for this residual stake. So, I am not expecting very aggressive bidding happening. It will be more interesting to see how it pans out in case of Hindustan Zinc, but here I am not very hopeful that we will be going to see aggressive bidding.
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