Air India gets ₹927crore equity infusion from government
IPO, far in excess of the portion reserved for them. This pushes the overall subscription levels for the issue and, in turn, attracts investors to buy shares in the grey market at a premium.
“That market has no scientific way of discovery. It could be rigged very easily, as it is unauthorised,” Shah said.
Around 12 companies have filed IPO or follow-on public offer (FPO) documents with the Securities and Exchange Board of India (Sebi), and are awaiting approval. Some of the prominent names here include National Stock Exchange of India Ltd., which plans to raise around ₹10,000 crore. SBI Life Insurance Co Ltd and New India Assurance Co Ltd plan to raise around ₹7,000 crore each, Prime Database data showed. Another 11 companies, have filed their IPO/ FPO documents, and got Sebi approval as well, and collectively plan to raise ₹6,580 crore.
A few, were of the opinion that selling on the listing day, was a good strategy in a bull market, and usually led to decent gains.
“People just hold on and have inertia or are greedy not to sell at a time when they can make profits. That is where they lose the opportunity to make good money,” said Prithvi Haldea, founder and chairman of Prime Database. “Then if the prices go down, they complain of over pricing.”
“IPOs should not be put on a pedestal and all expected to perform well and forever,” Haldea added.
The top IPO by issue size, Coal India Ltd., which raised nearly ₹15,200 crore in 2010, saw a listing day gain of 39.73%. Over 1-year, 2-year and 3-year periods, it posted gains of 33.06%, 43.04% and 19.24% gains respectively from the issue price.
Over the three-year horizon, the best performing stock was state-run bank Union Bank of India, which rallied 688.13%. Following next was Jubilant Foodworks Ltd., which gained 683.14% over the first three years. State-run Canara Bank which gained 553%.
Following next were, Maruti Udyog Ltd (now known as Maruti Suzuki India Ltd.), Bharti Tele-ventures Ltd. (now known as Bharti Airtel Ltd.), National Thermal Power Corp. Ltd.(currently known as NTPC Ltd.). These stocks rose 524.60%, 384.78% and 281.94% respectively in the first three years of their listing.
The government has infused another ₹927 crore into state-run Air India this month as part of a fund infusion agreed upon almost a decade ago, and which it has promised to continue even as it works towards selling part of its stake in the airline.
The infusion is timely because the airline has been facing a cash crunch, and, in fact, delayed salaries for some employees. Many state-owned banks have also become cautious about lending to the airline, given the move to privatise it. Mint learns that the airline has asked its parent ministry (the ministry of civil aviation) to speak to the finance ministry on this count.
“This will help with liquidity,” an Air India official who asked not to be named said, referring to the infusion. Of the ₹2,587 crore the airline was to get from the government this financial year, it has already been paid a total of ₹1,633. Since 2012, it has received about ₹25,000 crore as equity from the government.
Air India has a monthly shortfall of about ₹400 crore and banks had become jittery about lending to it after the government announced plans to privatise the airline in June, said a government official who did not wished to be named.
The aviation ministry told the parliament this month that it would continue to support Air India as per approved turnaround plan and would honour committed financial obligations till any further directions.
It also noted that the Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 28 June, 2017 had given in-principle approval for considering strategic disinvestment of Air India and its five subsidiaries and also approved the appointment of advisors for this.
On Sunday, union minister Nitin Gadkari who is part of the group of ministers said profitmaking subsidiaries of Air India should be kept out of proposed privatisation, PTI reported from Nagpur.
“I would urge the aviation minister that the subsidiary running the MRO is kept different from its parent, because if a decision on Air India (stake sale) is taken, I hope this company also doesn’t go to some other party. Any business that is profitable should be encouraged by the government,” Gadkari said.
“Today for the first time, I can say with satisfaction that Air India which had a bad image, has succeeded in registering an operational profit last year,” Prime Minister Narendra Modi had lauded Air India from the Red Fort in his Independence Day speech.
AROUND 12 COMPANIES HAVE FILED IPO OR FOLLOWON PUBLIC OFFER DOCUMENTS WITH THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI), AND ARE AWAITING APPROVAL