Hindustan Copper Tumbles 8% Amid OFS
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