NHPC sees good response from Institutional Investors ; Retail bids open today

GoI has declared its intention to raise Rs. 56,500 crores by selling stakes in the state- owned enterprises in  2016-17 . In its first divestment for the current fiscal the GOI has initiated the Offer for sale (OFS) of NHPC. Institutional investors showed lot of interest in the offer by GOI and subscribed to the issue 1.55 times on Wednesday  April 27. 100 crore shares were reserved for the category and the institutional investors have been bidding for 156 crore shares. As expected the majority of the bids from institutional investors came at the floor price of Rs. 21.75 per share.  A discount of 6 percent was available to investors on the Tuesday's closing price.  NHPC closed at Rs. 21.55, closing 6.5 percent lower on Tuesday's trade. Retail investors will be offered a 5 percent discount on the accepted bid price. 

NHPC a Mini Ratna Category-I Enterprise of the Govt. of India is a leading producer of hydro power in India. The NHPC OFS will bring down the GoI stakes in NHPC from 85.96 percent to 74.6 percent. With this move the NHPC will be compliant with the SEBI norms on minimum public shareholding. SEBI had advised all state owned companies except state owned banks to have at least 25 percent public shareholding to facilitate wider participation from investing public.

NHPC has never traded above its IPO price of Rs. 36 per share since its debut. The stock is trading above its 200 DMA; and on 1 year basis the stock has delivered 7 percent returns; and over a period of 6 months the stock has delivered 17 percent returns, outperforming the markets.Retail investors may take a cautious view on the OFS and should not buy the scrip only  because it is available at a discount. History has it that the scrip may be available at a price, even  lower than the OFS floor price.