Engineers India rebounds as OFS gets oversubscribed

The stock moved higher by 2.3% at Rs 199, recovering 4% from its early morning low of Rs 191 on the BSE.

Engineers India has moved higher by 2.3% at Rs 199, recovering 4% from its early morning low of Rs 191 on the BSE, after the offer for sale by the government as a part of its disinvestment drive got oversubscribed.

As per the data provided by the BSE, the Offer for Sale (OFS) had a total issue size of 33.69 million shares and it got a total subscription of 37.05 million, or 1.09 times as on 01.35 PM. CLICK HERE.

The non-retail category subscribed by 1.11 times, while retail category by 1.06 times, the data shows.

The government plans to divest nearly 33.7 million shares of the company, which will fetch around Rs 636 crore. Around 20% (6.7 million shares) of the issue is reserved for retail investors. The government has set the floor price of Rs 189 per share, is offering 5% additional discount to retail investors.

At 01:45 PM, the stock was up 1.8% at Rs 198 on the BSE. The trading volumes on the counter nearly doubled with a combined 1.43 million shares changed hands on the BSE and NSE so far.
 

In a recent note, analysts at Angel Broking had suggested investors subscribe to the issue given the attractive valuation.

"EIL’s stock price in recent times has corrected owing to weakness in order awarding and depressed earnings being reported. At the offer-for-sale (OFS) price of Rs 189, EIL stock trades at FY2017E P/E multiple of 16.5x. On considering 5% discount for retail investors, translating into an OFS price of Rs 180, EIL stock is available at FY2017E P/E ratio of 15.7x which is attractive considering the cash rich status of the company (Rs 2,279 crore cash as of 2QFY2016) and its strong market positioning within the domestic Hydro-Carbons consulting space," the note said.

"Further, in our view this space is likely to see strong awarding activity from here-on. Accordingly, given the attractive valuation, we recommend investors to apply for EIL shares in the OFS," it added.