Govt to divest 3.5% stake in NHPC; PSU stock falls 6%

Shares of NHPC tumbled nearly 6% in opening trade on Thursday after the government announced to sell up to 3.5% stake in the public sector unit (PSU) via an offer for sale. The floor price for the stake sale has been fixed at ₹66, a discount of over 9% to Wednesday's closing price.

As per an exchange filing, the government of India, which owns a 70.95% stake in the company, will offload over 25 crore equity shares in NHPC (with a green shoe option to sell 10 crore more). The deal is expected to fetch about ₹2,300 crore to the exchequer.

So far this year, the government has managed to raise ₹10,051 crore through disinvestments of shares in the state-owned companies, which is much lower as compared to the target of ₹51,000 crore for the financial year 2023-24. The government failed to meet the disinvestment targets as stake sales in three companies – IDBI Bank, NMDC Steel, and Hindustan Zinc – could not materialise due to undisclosed reasons.

Triggered by the government stake sale plan, shares of NHPC declined as much as 5.9% to ₹68.73 on the BSE. The PSU stock opened lower at ₹69.25, down 5.2% against the previous closing price of ₹73.06. On Wednesday, the stock ended 0.9% higher.

On the volume front, there was a spurt in volume, with nearly 35 lakh shares changing hands over the counter in the first hour of trade so far, while the market capitalisation slipped to ₹69,381 crore.

NHPC shares touched a 52-week high of ₹75 on January 5 this year, while it hit a 52-week low of ₹37.80 on February 27, 2023. The stock has given a return of 65% in the past year, while it soared 52% in six months and 6% in a month.

“The President of India, acting through and represented by the Ministry of Power, Govemment of India proposes to sell 2.50% of the paid-up equity (equivalent to 251,125,870 equity shares) shares held in NHPC having a face value of ₹10 each ("Base Offer Size") on January 18, 2024,… with an option to additionally sell up to 100,450,348 equity shares i.e. 1% of the paid up equity of the company,” NHPC says in a BSE filing on January 18.

For non-retail investors, the OFS will open on January 18 (T day), while retail investors can bid on January 19. The non-retail investors are allowed to carry forward their un-allotted bids on January 19, 2024 (T+1 Day) for allocation to them in the unsubscribed portion of the retail category. “The Offer shall continue to take place during trading hours on a separate window of the Stock Exchanges on T+1 (T+1 being January 19, 2024) commencing at 9:15 a.m. Indian Standard Time and shall close on the same date at 3:30 p.m. lndian Standard Time.”

“The eligible employees may apply for equity shares up to ₹500,000. However, any bids by eligible employees will be considered for allocation, in the first instance, for an amount up to ₹200,000 only,” the release notes.

Earlier this month, NHPC signed a memorandum of understanding (MoU) with Gujarat Power Corporation (GPCL) for a proposed investment of ₹4,000 crore in Kuppa Pumped Storage Project (750 MW), Chhota Udaipur, Gujarat with the proposed year for commencement of investment as 2024-25. The pact was signed during Vibrant Gujarat Global Summit, 2024.

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