NHPC share sale garners 1.56 times subscription

Most of the bids were made at the base price of Rs 21.75

The Rs 2,700-crore worth share sale in state-owned power generation firm NHPC by the government garnered 1.56 times subscription. As per data provided by stock exchanges, the offer for sale (OFS) of nearly 1.26 billion shares had garnered bids for 1.57 billion shares from institutional investors.

Investment banking sources said most of the bids were made by government-owned entities, including Life Insurance Corporation.

Read more from our special coverage on "NHPC"

• NHPC begins stake sale; stock down over 5%
• Centre to sell 11.36% stake in NHPC today
• Govt to sell 11.36% stake in NHPC, may raise Rs 2,700 crore
• NHPCs Parbati-III plant resumes power generation

NHPC is the first disinvestment by the government of the current fiscal, where the government is looking to raise an ambitious Rs 56,500 crore through selling shares in public sector undertakings (PSUs).

Shares of NHPC ended at Rs 21.55, down Rs 1.5, or 6.51 per cent on the BSE.  Most investors bid at the floor price of Rs 21.75, exchange data showed. The centre, which currently holds 85.96 per cent stake in NHPC, will see its shareholding dip to 74.6 per cent following the share sale. The OFS will help NHPC comply with the minimum 25 per cent free-float requirement.

Nearly 20 per cent of the OFS is reserved for retail investors- those investing up to Rs 2 lakh. Retail bidding will take place on Thursday. The centre is offering 5 per cent discount for the allotment price to retail investors. If the retail portion 251.5 million shares remained undersubscribed, the shares will be sold to institutional investors who applied on Wednesday.

At the OFS price of Rs 21.75 per share, NHPC is valued at 0.71 times its estimated book value for fiscal 2017.

“Considering NHPC’s strong expansion plans and execution track record, the valuation appears reasonable with respect to peers. However, with the overhang on the stock due to the uncertainty in the Subansiri project, we remain Neutral on this OFS,” said Angel Broking in a note on Wednesday.

NHPC OFS is being handled by Edelweiss Securities, HSBC Securities and IDFC Securities.