NTPC extends fall; hits five-month low

In past three trading sessions, the stock declined 8% from Rs 130 to Rs 120, its lowest level since September 14, 2015 on the NSE

Shares of NTPC were trading lower by 3% to Rs 119.60 on the National Stock Exchange (NSE), fallen below its base price of Rs 122 set by the government for stake sale. The stock hit its lowest level since September 14, 2015 on the NSE in intra-day trade.

In past three trading sessions, the stock has declined 8% from Rs 129.80 on February 19, after the central government said it will divest 412 million equity shares or 5% stake in power giant NTPC through the Offer for Sale (OFS) route.

On Tuesday, the 330 million share offering, excluding the retail quota, received 596 million bids, with nearly a fourth of them from insurance companies, mainly Life Insurance Corporation of India.

The 82 million shares reserved for the retail investors has so far seen (as of 10:55 am) 1.87 million bids — 2.26 times shares on offer. The most of bids were received at a cut-off price, data provided by the BSE showed.

Retail investors are being offered a 5% discount on the allotment price. If the retail portion remains unsubscribed, the shares will be allotted to non-retail investors.

Meanwhile, Moody's Investors Service said that the government's 5% stake sale in NTPC will not impact the rating of the country's largest power producer. Moody's has a 'Baa3' rating on NTPC with a positive outlook.

NTPC's rating remains supported by its strategic importance to the Indian economy, given its position as India's largest power generation company, Moody's said in a statement.

"We expect the government to maintain its majority stake in the company even after the sale of 5% stake which, as such, does not affect our assessment of sovereign support for NTPC," said Abhishek Tyagi, V-P and Senior Analyst, Moody's.

Moody's, however, said NTPC's rating could come under downward pressure if there are unfavourable regulatory developments such as tariff reductions, which could negatively affect the company's financial position.

At 10:58 AM, the stock was trading at Rs 119.70 on the NSE. A combined three million shares changed hands on the counters NSE and BSE.