The government has announced a floor price of Rs 40 a share for National Aluminium Company’s (Nalco) share auction tomorrow.
The price is at a nearly 10 per cent discount to the aluminum manufacturer’s current market price. Shares of Nalco, which has a market cap of Rs 11,400 crore, on Thursday closed at Rs 44.25, down Rs 2.05 per cent, 4.4 per cent.
Analysts said the issue was expected see good demand due to attractive pricing. Nalco had last closed below Rs 40 on October 31, 2008.
Market players said the share price closed lower on Thursday, primarily on the back of short positions taken by traders. Typically, traders sell shares ahead of any share auction and later cover it by auctioning a lower price.
The government will raise about Rs 1,030 crore at the floor price of Rs 40. It will offload up to 10 per cent (257.8 million) of its holding in the company through the offer for sale route. The share sale will comprise core issue size of 128.8 million and an equal amount as an over-allotment option, which gives the government an option of mopping additional demand.