National Thermal Power Corporation (NTPC) shares were trading lower by about 2 percent Tuesday in response to the government's decision Monday to sell another 5 percent stake in the thermal power producer. The sale is expected to fetch about Rs 5,000 crore at the floor price fixed at Rs 122 per share.
After the sale, the Central government's stake in NTPC will come down to 69.96 percent from the current 74.96 percent.
On Monday, NTPC had informed the stock exchanges the Central government would sell 41.22 crore of its shares through the offer-for-sale (OFS) route. The issue will be open for two days â€” Tuesday and Wednesday.
This is the sixth public sector undertaking (PSU) stake sale this financial year. In all, the government had identified 10 PSUs for stake sale, including Oil India, Container Corporation, NMDC, MMTC, ITDC, NTPC, Bharat Electronics, EIL, Nalco and Hindustan Copper.
This will be the fourth public offering by NTPC, which came out with its initial public offering (IPO) in October 2004, when the Central government offloaded 5 percent stake for about Rs 2,684 crore, according to the Mint.
The sale is part of the disinvestment programme of the Narendra Modi government, which had planned to raise Rs 69,500 crore via stake sale in various PSUs in FY2016. The government has managed to raise about Rs 13,300 crore till now, the latest being through disinvestment in Engineers India Ltd (EIL).
The Narendra Modi government is likely to scale down its disinvestment target to Rs 30,000 crore next fiscal when it presents its budget for 2016-17 (Budget 2016), in view of the imminent shortfall from the budgeted estimate of Rs 69,500 crore this year, according to State Bank of India.
"We expect government would keep a realistic disinvestment target of Rs 30,000 crore for FY17," said State Bank of India in its note released on Feb. 22, adding that the current year's target was "over-optimistic."
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]