The Union government on Monday set a floor price of Rs 1,161 per share for its offer for sale (OFS) in Tata Communications. It will divest 10 per cent with an additional 6.12 per cent as greenshoe option.
After this sale, the Centre will sell its remaining 2,85,00,000 shares to Panatone Finvest, an arm of Tata Sons. At present, the government holds 7,44,46,885 shares or 26.12 per cent of Tata Communications (formerly VSNL).
At the floor price, the Centre will garner close to Rs 8,650 crore from the sale that will see its exit from the company. The floor price represents a discount of 10.42 per cent to the closing price of the Tata Communications scrip on the BSE on Monday.
The government will initially sell up to 2,85,00,000 shares of Tata Communications, representing 10 per cent of its equity.
The offer will open on Tuesday for non-retail investors and on Wednesday for retail investors and for those non-retail subscribers who choose to carry forward their unallocated bids.
Here, a retail investor is an individual investor who places bids for not more than Rs 2 lakh across stock exchanges. Close to 10 per cent of the offer is reserved for them.
The Centre added that it has an option to additionally sell 1,74,46,85 shares or 6.12 per cent of the company’s equity.
The announcement came on a day the Sensex crashed 397 points following weak macro-economic numbers. The index moved 1035.71 points after opening lower at 50773.47. It settled 0.78 per cent lower at 50395.08. The NSE Nifty finished 101.45 points, or 0.67 per cent, down at 14929.50.
Though the benchmark indices ended in the red, the primary market continues to witness good interest with six companies hitting the markets this week.
They include Anupam Rasayan India (which opened for subscription on March 12), Craftsman Automation, Laxmi Organic Industries, Kalyan Jewellers, Suryodaya Small Finance Bank and Nazara Technologies Ltd.
Anupam Rasayan’s IPO has already been subscribed 3.64 times.
“While the long term structure of the market continues to remain positive, it may face some hurdles in the near term due to concerns over the bond yields, commodity prices and risk of increase in inflation. Even Nifty valuation at 21 times 2021-22 earnings per share is not inexpensive and demands consistent delivery of earnings. Rising bond yields may cap equity valuations as the RBI may have to do a fine balancing act to keep bond yields at lower levels while managing the government’s borrowing programme. Thus given the likelihood of high volatility continuing in the market for some time, investors would do well by accumulating good quality companies on decline in the market’’, Siddhartha Khemka, Head - retail research, Motilal Oswal Financial Services said.
