SAIL Stock Falls Most In Eight Months On Government’s Stake Sale Plan
Shares of Steel Authority of India Ltd. fell the most since May after the government announced its plan to sell stake in the steelmaker.
The government plans to sell 20.65 crore shares, or 5% of the total equity, in SAIL through an offer-for-sale, according to an exchange filing. The government will also have an oversubscription option to sell another 20.65 crore shares, the filing said.
The floor price for the OFS is fixed at Rs 64 apiece, a 13.6% discount to Wednesday’s closing price.
“Assuming the entire deal goes through at the floor price, the Government of India will be able to raise up to Rs 2,640 crore,” Morgan Stanley’s Gaurav Rateria said in a note. “In the near term, the OFS can create volatility in the stock price because the floor price is at a material discount to the current market price.”
The OFS, according to Rateria, will be a secondary transaction. It will have no bearing on the fundamentals and financials of the company.
Shares of SAIL fell as much as 9.6% — the most since May 4, 2020 — to Rs 67.55 apiece in early trade on Thursday. The stock is down for the second straight day. Volumes on the stock are more than six times its 20-day average.
Of the 18 analysts tracking the company, 10 have a ‘buy’ rating, five suggest a ‘hold’ and three recommend a ‘sell’. The average of Bloomberg consensus 12-month price targets implies an upside of 4.5%.