NTPC stock slips after dull response from retail investors to OFS share sale

Shares of NTPC slipped over 2% on Thursday following a dull response from the retail investors to its planned Rs 14,000 offer for sale. The government’s stake sale of up to Rs 14,000 crore in the India’s biggest power producer NTPC was subscribed for only 73% by the retail investors of the quota allocated to them of the extended issue including greenshoe option. Initially, the government was intended to sell over 41.22 to 82.44 crore shares which can raise up to Rs 7,000 to Rs 14,000 crore at a floor price of Rs 168 per share, through the two-day offer for sale (OFS), including a greenshoe option to sell a further 5% equity in case of over-subscription.

The government has received bids for 7% stake in India’s largest power producer NTPC, which will fetch about Rs 9,100 crore to the exchequer. The stock of NTPC fell as much as 2.56% today to the day’s low of Rs 163.7.

Yesterday, the shares of NTPC ended 0.3% lower on Wednesday at Rs 168 on BSE after the retail investors bid only for about 73% of the shares allocated to them. On the first day of bidding which was only restricted to institutional investors, the OFS was subscribed 1.41 times of the total 32.98 crore shares reserved for non-retail investors. NTPC shares were the biggest loser on the benchmark Sensex on Tuesday – first day of bidding, falling as much as 2.8% to close at Rs 168.5 on the BSE. Over the course of three days from Tuesday, NTPC shares had lost about 5.5% to the today’s low of Rs 163.7. According to the offer document, the company employees would be eligible to apply for shares up to Rs 2 lakh each only.

The government has so far this fiscal raised over Rs 8,800 crore through disinvestment in six companies, including selling a stake in L&T through Specified Undertaking of Unit Trust of India (SUUTI), and one share buyback. This is against Rs 72,500 crore targeted to be raised in 2017-18 through stake sale in PSUs. This includes Rs 46,500 crore from minority stake sale, Rs 15,000 crore from strategic disinvestment and Rs 11,000 crore from a listing of PSU insurance companies.

The success of NTPC offer for sale would be crucial for helping the government in meeting its ambitious divestment target for the financial year. While the initial share sales in Housing and Urban Development Corporation and Cochin Shipyard fetched Rs 1,207 and Rs 470 crore, respectively, the sale of a stake in Larsen & Toubro-owned through Specified Undertaking of the Unit Trust of India (SUUTI) fetched Rs 4,153 crore.