ONGC OFS subscribed 1.6 times; will be open to retail investors on Thursday

Unsubscribed shares in retail category, if any, will be allotted to non-retail investors

Oil and Natural Gas Corporation’s (ONGC’s) offer for sale (OFS) garnered 303 million bids from investors--1.6 times of 188.7 million shares put on the block by the government. The share sale will add over Rs 3,000 crore to the government’s disinvestment kitty. 

Most of the bids in the OFS came around Rs 160 per share, slightly above the base price of Rs 159 set by the government. 

Shares of ONGC fell over 5 per cent to finish at Rs 162.25 on the BSE. The stock, which hit a 52-week high of Rs 194.60 on March 8 led by the rally in global crude oil prices, has corrected thereafter as oil prices have eased recently. Brent crude oil price had risen to over $130 a barrel on March 9, levels last seen in June 2014.

Oil producers like ONGC, Oil India and Vedanta gain from higher oil prices, as much of the increase flows to their bottom-lines. The same is true when oil prices decline.

Following the share sale, the government’s stake in ONGC will decline from 60.41 per cent to 58.91 per cent. Close to 19 million shares, worth Rs 300 crore, reserved for retail investors will be auctioned on Thursday. The unsubscribed shares in the retail category, if any, will be allotted to non-retail investors.

ICICI Securities, Citibank, Kotak Mahindra Capital, HSBC and UBS acted as merchant bankers for the OFS. Prior to ONGC stake sale, the government’s disinvestment receipts stood at Rs 12,424 crore for 2021-22. The revised divestment target for this fiscal has been set at Rs 78,000 crore. However, the target will be undershot in a big way as the mega IPO of LIC has got pushed to the next financial year due to a spike in market volatility following Russia’s attack on Ukraine.