Tulsian expects lukewarm response for NTPC OFS

SP Tulsian of sptulsian expects very lukewarm response for NTPC OFS.

Tulsian told CNBC-TV18, “I am expecting very lukewarm response for NTPC offer for sale (OFS) because we have been talking a discount of sub 5 percent but if you see the future Options price yesterday closed at Rs 149.30. That means government has gone for a discount of 2.9 percent. I think in case of these issues the future price is more correct and indicative. Obviously any investor who is going for the issue will be looking for the future price at which the share is ruling and it is at a 2.9 percent discount. Conventionally if you see government has been keeping a discount of at least about 5 percent. So sometimes I don’t understand the wisdom of keeping such a low discount that why so much confidence because National Mineral Development Corporation (NMDC) and Oil India both had their quality because of the sector, because of the under ownership of the Foreign Institutional Investors (FIIs).
He further added, “However here the FIIs already have 4.5 percent stake and on top of it LIC has 6.2 percent stake in the company. If government is going to fall back on LIC I don’t know if they have conclusively decided that then it is a different case but I am not convinced at all with the floor price of Rs 145. If you see the preparations being made by the insurance companies and LIC, they have been selling their stake in blue-chip companies in last one month or so as a part of profit booking but that also indicates that they have mentally prepared themselves that they may have to take out about USD 2 billion to salvage this issue. So I am expecting lukewarm response at least from FIIs.”