SAIL stake sale commences on bourses, shares down

The floor price for SAIL's share sale has been set at Rs 63 apiece, which was a 1.41% discount to yesterday's closing price

Shares of steel major SAIL today lost 1.25% on the BSE in early trade as government's 5.82% stake sale of the firm commenced on the bourses.

The floor, or the minimum offer, price for SAIL's share sale has been set at Rs 63 apiece, which was a 1.41% discount to yesterday's closing price.

On the BSE, the company's scrip hit a low of Rs 63.10, down 1.25% over previous close, soon after the start of market hours. It continued to trade in the range of Rs 63.10-63.70  in the early minutes, which was higher than the base price.

At the floor price of Rs 63, a 5.82% stake sale in SAIL could garner around Rs 1,514 crore to the exchequer.

The Empowered Group of Ministers (EGoM) on disinvestment, headed by Finance Minister P Chidambaram, yesterday decided on pricing of 24.03 crore share or 5.82% stake sale of the country's largest steel producer through the Offer For Sale (OFS) route.

The auction, if subscribed fully, would take the proceeds from disinvestment in this fiscal to at least Rs 23,800 crore, the highest ever realisation on disinvestment front in a single year. It would be, however, a tad less than the revised estimates of Rs 24,000 crore.

SAIL stock has lost 8% in the last one week and over 30% since March last year.

The government currently holds 85.82% stake in the company.

The Cabinet had in July last year approved a 10.82% stake sale of the steel major.

Merchant bankers for the share sale offer include SBI Caps, Kotak Mahindra and Deutsche Bank.

For the third quarter ended December 31, 2012, SAIL reported a 23% decline in net profit at Rs 484 crore from the year-ago period mainly due to lower net sales realisation amid subdued market conditions.

The steel major has a cash balance of over Rs 6,000 crore.