Government divests 10 per cent stake in EIL: stock shines

The government decided to sell 10 per cent of its stake in Engineers India (EIL) on January 29. The government will get an amount of around Rs 636.81 crore from the divestment.  The stake sale received bids for over 3.39 crore shares, witnessing 1.01 times the total shares on offer as on 13.00 hours according to NSE.  The subscription may rise further during the day as bidding will continue till trading hours.

The promoters of EIL came up with an Offer For Sale (OFS) of 3,36,93,660 equity shares of the company pertaining to face value of  Rs 5 each. The government fixed the floor price of Rs 189 per share for selling its 10 per cent shareholding in the company. The government currently holds 69.37 per cent in EIL. After divestment it will have 59.37 per cent in the company. EIL’s OFS is open for today’s trading session i.e. January 29.

The government has raised only Rs 12700 crore through PSU disinvestments in the current financial year. However, the cabinet had budgeted a target of Rs 69500 crore for the fiscal year. Out of the government’s target, Rs 41000 crore was to come from minority stake sale in PSUs; and remaining Rs 28500 crore from strategic stake sale. Meanwhile, the government was able to sell stake only in Indian Oil, Rural Electrification Corporation (REC), Power Finance Corporation (PFC) and Dredging Corporation due to volatility in the stock markets during the year. The divestment of government in EIL is ranked fifth during the current fiscal year.

The offer price is at a discount of 2.4 per cent to closing price of Rs 194.05 as on January 28. The investors are cheering the government’s divestment and stock price gains with a momentum. The share price of the company increased by 1.65 per cent on bourses in early trades; and is trading at Rs 197 on an intraday basis.

EIL is a public sector company under the Ministry of Petroleum and Natural Gas that provides engineering and construction consultancy particularly in the hydrocarbon space. The company's services include technologies, pre-Front End Engineering Design (FEED) and FEED, project management, procurement services, construction services and specialized services. The Company is focused on sectors, such as fertilizer and Liquefied Natural Gas (LNG), non-ferrous metallurgy, infrastructure, strategic crude oil storage, nuclear and solar energy, and exploration and production.