Hin­dus­tan Cop­per Tum­bles 8% Amid OFS

The Economic Times - - Smart -

Mumbai: Shares of Hin­dus­tan Cop­per ended down 8% at ₹ 65.05 on the BSE on Wed­nes­day amid the offer for sale of its shares by the gov­ern­ment. The OFS was open for in­sti­tu­tional in­vestors on Wed­nes­day and re­tail in­vestors will get to bid on Thursday. The offer was sub­scribed 1.71 times at the end of the day on Wed­nes­day.

The floor price of ₹ 64.7 was at a dis­count of 8.35% to Tues­day’s clos­ing price of ₹ 70.6 on the BSE. Eq­uity deal­ers said Life In­sur­ance Cor­po­ra­tion of In­dia was the main buyer in the in­sti­tu­tional part of the offer for sale. How­ever, this could not be in­de­pen­dently as­cer­tained. The in­surer held 10.7% in the com­pany as of June 30.

On Tues­day, the gov­ern­ment had said it would sell 3.7 crore shares, or 4%, in Hin­dus­tan Cop­per with an op­tion to issue an­other 3.7 crore shares in case there is over sub­scrip­tion. The gov­ern­ment holds 82.8% in Hin­dus­tan Cop­per.

An­a­lysts said the stock is ex­pen­sive, trad­ing at a trail­ing price to earn­ings ra­tio of 97 times, due to which it is not an at­trac­tive bet.

De­spite a 29% gain in in­ter­na­tional cop­per prices (on Lon­don Metal Ex­change) in the past year, the stock has not moved up sig­nif­i­cantly. It is up 9.2% in the past year. How­ever, it is down 35% in the last five years.

On the earn­ings front also, although FY17 saw a jump in profit and sales, th­ese fig­ures have trended down over the last five years. The state-owned cop­per ma­jor re­ported a 64% jump in net profit for the fi­nan­cial year ended March to ₹ 61.9 crore as com­pared to ₹ 37.7 crore in the pre­vi­ous year on higher vol­umes. Net sales in­creased 14.4% from the pre­vi­ous year to ₹ 1,228.7 crore in FY17.

The OFS was open for in­sti­tu­tional in­vestors on Wed­nes­day and re­tail in­vestors will get to bid on Thursday

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