EIL falls 13% on BSE after govt fixes price band for FPO

Shares of state-run Engineers India today plummeted by nearly 13 per cent on the BSE, a day after the government set the price band of the company's follow-on public offer at Rs 270-290, which is at a discount from the current market price.

Shares of Engineers India  fell 12.80 per cent to touch an intra-day low of Rs 294.40 on the Bombay Stock Exchange.

The price band fixed by the government is at a discount of 14 per cent from EIL's closing price of Rs 337.65 on the BSE on Friday.

"The government's disinvestment process has so far failed to favour the market. Though the company has a fantastic order book, it will tend to trade low as the price band fixed is at a discount from the company's current market price," BNP Paribas Financial Services Assistant Vice-President Gaurang Shah said.

Yesterday, a Group of Ministers headed by Finance Minister Pranab Mukherjee had set the price band for the sale of the government's 10 per cent shareholding in the engineering consultancy firm at a discount from the closing price of Rs 337.65 on Friday.

On the National Stock Exchange, the stock was trading at Rs 309.10, down 8.64 per cent.

On the volume front, a total of over six lakh shares of the firm changed hands on the bourses.

Meanwhile, the broader market Sensex was trading up 8.65 points at 18,139.63.

The government will raise about Rs 9,000 crore at the lower end of the price band and over Rs 9,700 crore at the upper end, official sources said.

EIL's public offer of 33.69 million equity shares will open tomorrow and close on July 29 for qualified institutional buyers and on July 30 for retail and high net worth investors.