The auction of Oil India (OIL) share saw good response from investors in the initial hours of sale today with bids coming in for over 2.40 crore shares in the first three hours of trade.
The government is offloading 6.01 crore shares or 10% stake in OIL and has fixed a floor price of Rs 510 a share. The stake sale would fetch Rs 3,065 crore to the exchequer.
Shares of OIL opened on a weak note and fell by 1.34% in the opening trade at Rs 532 apiece on the BSE.
The one-day auction began this morning at 0915 hours on the stock exchanges and attracted bids for a total of 2.40 crore shares by 1250 hours against an offer of 6.01 crore shares.
The indicative price which is the weighted average price of all vaild bids was Rs 522.60 a share, while the stock was quoting at Rs 531.65, down 1.40% over previous close on the BSE.
During the trade, OIL scrip fell to a low of Rs 521.30 on the BSE.
The government is selling the minority stake in OIL through the offer for sale (OFS) route.
To make the OFS process more transparent, market regulator Sebi last month had allowed that indicative price, calculated on the basis of all valid bids should be disclosed throughout the trading session.
Bids for over 2.21 crore shares were with 100% margin, that means if the bidder decides to withdraw later, they can do so. Bids that came in with zero% margin were over 18.60 lakh, as per data on the National Stock Exchange.
The government holds 78.43% stake in the company and would come down to 68.43%, after disinvestment. OIL's paid-up capital as on March 2012 was Rs 601 crore.
"We expect a good response (to OIL issue)," Disinvestment Secretary Ravi Mathur had said yesterday, adding that the floor price of Rs 510 a share was at a good discount.
As per the disinvestment roadmap of the government, OIL issue was initially slated to happen in the last week of January, to be followed by one PSU stake sale every fortnight. The government has so far raised Rs 6,900 crore through disinvestment in the current fiscal.
The stock has been on fire ever since the government started considering partial decontrol of heavily subsidised diesel prices. A partial deregulation would mean OIL having to pitch in lesser subsidy.
Upstream firms, like OIL and ONGC, make up for about 40% of the revenue that fuel retailers lose on selling diesel, domestic LPG and kerosene at government-controlled rates.
The government had on January 17 allowed retailers to raise diesel prices by small quantum every month to cut the Rs 96,000 crore deficit on the fuel sale.
The international roadshows for OIL stake sale held in the US, UK and West Asia, to attract investors saw a very encouraging response.
OIL got listed on stock exchanges in the year 2009. As on March 31, 2012, the company has employee strength of 8,096.
