'PGCIL shares may jump 25-30% over FPO issue price by end-Nov'

Investors that subscribe to Power Grid Corporation of India Ltd's (PGCIL) ongoing follow-on public offer are likely to see their shares appreciate by 25- 30 per cent over the issue price by the end of this month, a key government official said today.

"My own belief is that by the time this month (November) ends, the price would be as much as Rs 115 to Rs 120. If that is so, people (who subscribe to the FPO) will be making a 25- 30 per cent gain in the shares of Power Grid," Department of Disinvestment Additional Secretary Sidhartha Pradhan said.

"In fact, when we (the Cabinet) gave a discount of 12 per cent four days ago, then the (market) price was Rs 102. Yesterday, it has gone up to Rs 104," he added.

The electric power transmission company's 84.17 crore share sale (Rs 7,500 crore) opened for bids yesterday and closes on November 12.

The price band has been fixed at Rs 85-Rs 90. A 5 per cent discount has been offered to individual retail bidders and eligible employees on the issue price of shares.

Pradhan expects the share price to be fixed at the upper extreme of the price band, at Rs 90, as the offer was fully subscribed yesterday itself.

"Never in the Indian capital market history has a follow -on public offer, be it private or government, ever been subscribed on the first day itself," he said.

Pradhan said the Power Grid share price has been consciously and deliberately kept at "very reasonable" level by the government, because it wants that "the people of India, in right earnest, should be owners (of public sector) so that they get an incentive and make money.