Ioc Projects 60% Eps Growth

The expectation is that the corporation will seek a 17 per cent premium over the current price of Rs 645 quoted at the stock exchanges. The government expects to sell the GDR issue at a minimum price of Rs 755, the price at which it was first listed in the bourses in August 1995.

Going by the projection of EPS in 1997-98 and its current PE multiple of 20.16, the price of an IOC share works out to Rs 1,028. This is high compared to Rs 645, the price at which it was traded on Monday.

On the other hand, if the industrys average PE multiple of 13 is taken into account the price of an IOC share comes to Rs 663. This will give the IOC a mere premium of 3 per cent. Since both these factors are taken into consideration while fixing the premium, the issue managers will have to choose a point between the two prices.

 

IOC sources, however, said the organisation has no worries about the possibility of bear hammering by foreign institutional investors (FIIs) because the floating stock available in the market was too small.

The recent GDR issue of the State Bank of India and an earlier attempt to tap the international market by the Videsh Sanchar Nigam Ltd (VSNL) had met with strong bear hammering.

We have a 4 per cent stock in the market and most of it is with domestic banks and financial institutions. FIIs hold a very minor part of it. Another 5 per cent with employees which has a lock-in period expiring in April, 1988, an IOC source said. After the issue, the governments stake will come down to 86 per cent from the present 91 per cent.

Meanwhile, several international merchant bankers wanting to handle the issue will give presentations before the corporation officials beginning October 16. It has been allowed by the government to disinvest 5 per cent of its equity to raise between $ 350 million and $ 400 million.

The IOC shares are among the major sufferers in the current depression in the stock market. The scrips were being traded at Rs 730 last July. The book value of IOC stock is Rs 202 a share.