Govt divests 10% in Nalco, raises ~1,300 cr

In its first public sector unit (PSU) stake sale in the current financial year, the government has successfully divested 10 per cent stake in National Aluminum Company (Nalco), for ~1,300 crore.

A total of 193.3 million shares, including an over-allotment option, were put on auction through the Offer For Sale (OFS) route.

Bids came for 255 million shares. On Thursday, 71.22 million shares meant for individual (retail) investors were auctioned. The retail demand was three times more than the shares on offer. The non-retail portion was subscribed on Wednesday. It got bids for 142.4 million shares, against 96.6 million on offer. The base price for the OFS was set at ~67. Most of the bids came around this price. Retail investors were offered an additional five per cent discount. Shares of Nalco ended on Thursday at ~67.75.

Following the share sale, the government’s stake in Nalco will fall to 64.58 per cent, from the earlier 74.58 per cent.

In the non-retail segment, most of the bids come from state-owned institutions, including Life Corporation (LIC).

Nalco’s shares are expected to do well due to firming up of global aluminium prices. Analysts at Motilal Oswal expect a substantial boost in Nalco’s operating profit, thanks to higher aluminium prices and volumes. Nalco’s consistent dividend record is a positive for the stock, they say. The Centre has an ambitious divestment target Insurance of ~72,500 crore for this financial year. Of this, it expects to garner ~46,500 crore through minority stake sales and another ~15,000 crore from strategic divestment. Initial public offerings of general insurance companies are expected to fetch another ~11,000 crore. Divestment proceeds had touched record high of ~46,246 crore during the previous financial year, Dipam data showed.