Government's divestment program: A feast party for bears

The government’s stake sale in MMTC, first in fiscal year 2013-14 proved to be a feast party for bears yet again. The offer price for 9.33 percent divestment was fixed at Rs 60 apiece, a 72 percent discount to its previous day closing price of Rs 211. This led the shares of MMTC to be locked at 10 percent lower circuit on Thursday at Rs 191.

As seen from the table, the government had raised Rs 23,857 crore in the previous financial year via divestment in seven PSU companies. Analysts say, all the issues were heavily under-priced by the government barring NMDC. And that’s not all, even after the offer for sale was done, shares of Hindustan Copper, NMDC, Nalco and SAIL are currently trading at 52-week lows, making money for bears.

Company	Date	Offer price	Prev day price	Discount to previous day closing	CMP	% Chg since OFS	% Stake divested	Amount raised	Post stake sale
Hindustan Copper	23-Nov-12	155	266	-42%	84	-85%	5.58	807.91	94.01
NMDC	12-Dec-12	147	159	-8%	112	-31%	10	5979.79	80
Oil India	1-Feb-13	510	539	-5%	540	6%	10	3144.97	68.43
NTPC	7-Feb-13	145	152	-5%	150	3%	9.5	11469.39	75
RCF	8-Mar-13	45	44	2%	38.6	-17%	12.5	310.49	80
NALCO	15-Mar-13	40	44	-9%	29.5	-36%	6.09	628.53	81.06
SAIL	22-Mar-13	63	64	-2%	55	-15%	5.82	1516.17	80