The state-run power behemoth NTPC's follow-on public offer (FPO), which opens tomorrow, is likely to receive bids at around 10 per cent premium to the floor price of Rs 201 per share, say analysts.
"Looking at the fundamentals of the company, the issue will get the bid at a premium in the range of 5 to 10 per cent from its base price," Angel Broking's Power Analyst Rupesh Sankhe said.
Terming the issue as attractive from long- and medium-term investment view, marketmen feel the eventual response from investors would also depend on the prevailing market sentiment.
"The issue is mainly targeted at overseas and domestic institutional investors. There is a possibility of 10 per cent premium from the floor price of Rs 201 per share," CNI Research Chairman and Managing Director Kishor P Ostwal said.
The Empowered Group of Ministers, at its meeting held yesterday, had decided the floor price for the FPO at Rs 201 per equity share--much lower than the closing price on the Bombay Stock Exchange (BSE) yesterday.
At the floor price of Rs 201, the government would be able to mop up Rs 8,286 crore from the market through the issue.
Shares of NTPC today slipped 2.46 per cent to Rs 206.05 from previous close on the BSE, making it the fourth-biggest loser in the benchmark index Sensex, which plunged 193 points on heavy selling pressure.
"NTPC is a very good firm fundamentally for an investor. The FPO will get a decent response and possibility of 5-10 per cent premium cannot be ruled out," SMC Capitals Equity Head Jagannadham Thunuguntla said.
The government holds 89.5 per cent stake in NTPC and it plans to dilute 5 per cent of this stake constituting 41.22 crore shares through its proposed FPO.
The EGoM had also approved offering a Rs 10 per share discount to employees, thereby fixing the floor price for the employees at Rs 191.
The issue, which opens tomorrow, would close on Friday.
This is the first public from the country issue which is adopting the French auction route to raise funds. Under the French auction model, institutional buyers are free to bid above a certain floor price. The highest bidder gets preference during the allotment of shares.
Apart from NTPC, state-run companies like Rural Electrification Corp, Satluj Jal Vidyut Nigam and mining giant NMDC are planning to hit the capital market before March end.
