ITDC, BEML surge up to 17% on report govt may invite EoI for divestment

In the past seven trading days, BEML stock has advanced 36 per cent

Shares of state-owned hotel company India Tourism Development Corporation (ITDC) and defence firm BEML rallied up to 17 per cent on the BSE in Thursday's session on the back of heavy volumes following a report that the government could invite expression of interest (EoI) for divestment in these public sector companies.

"Over the next few weeks, the department of investment and public asset management (DIPAM) will finalise the process of strategic sale of several public sector undertakings (PSUs) including BEML, India Tourism Development Corporation (ITDC) and Central Electricity Corporation," Moneycontrol reported quoting sources.

Among individual stocks, ITDC rallied 17 per cent to its 52-week high of Rs 354 on the BSE. Trading volumes on the counter jumped seven-fold with a combined 2.6 million equity shares changing hands on the NSE and BSE till the time of writing of this report.

As per disinvestment policy of the government, nine hotel properties including three joint venture hotel properties have been transferred or handed over to the respective state governments so far. Divestment process of remaining properties i.e. process for joint leasing in respect of Hotel Pondicherry Ashok and process for giving Hotel Kalinga Ashok, Bhubaneswar on operation & maintenance contract is underway, ITDC said in its 2019-20 annual report.

Shares of BEML, meanwhile, surged 15 per cent to Rs 1,053 on the BSE, trading close to its 52-week high level of Rs 1,080 touched on January 1, 2020. In the past seven trading days, the stock has advanced 36 per cent after Porinju Veliath's Equity Intelligence India bought 265,000 shares of the company at Rs 847.63 per share on Thursday.

The government is likely to sell 28 per cent of its stake in BEML through strategic disinvestment and retain 26 per cent after the dilution of its shareholding in the public sector undertaking, according to the report. The government currently holds 54.03 per cent stake in the diversified engineering company.

In January this year, the DIPAM intimated the company that CBRE South Asia and JLL Property Consultants (India) have been appointed as consultancy firms for monetization of identified assets of BEML.

On Tuesday, December 22, 2020, DIPAM had issued preliminary information memorandum inviting EoI from potential buyers for Shipping Corporation of India (SCI) by February 13, 2021. The government is proposing strategic disinvestment of its entire 63.75 per cent stake in SCI along with the transfer of management control.

DIPAM deals with all matters relating to the management of the central government's investments in equity including disinvestment in public sector undertakings (PSUs). The four major areas of its work relate to strategic disinvestment, minority stake sales, asset monetisation and capital restructuring.