Mumbai: State-run Engineers India Ltd (EIL) on Monday said it has set the price band for the over Rs900 crore follow-on public offering (FPO), which hits the market on Tuesday, at Rs270-290 a share.
A group of ministers headed by finance minister Pranab Mukherjee had on Sunday fixed the FPO price band at Rs270-290, which is a steep 14.75 to 8.44% discount to Friday’s closing price.
Following this sharply lower pricing, the EIL counter was battered by investors on Monday, which saw the scrip plunging nearly 13% in the day. However, the shares managed to recoup some of the sharp losses, yet closed at Rs316.75, or over 6% loss on the BSE.
The offer will close on 29 July for institutional buyers and 30 July for retail investors. Retail investors will be given a discount of 5% on the offer price, the company said. The government will mop up about Rs909 crore at the lower end of the FPO and Rs977 core on the higher end.
The government will sell 10% stake through the FPO which comprises a net offer of 3.29 crore equity shares of Rs5 each. At present, the government holds a little over 90% in the company.
It will be the second divestment this fiscal after Satluj Jal Vidyut Nigam through which Rs 1,000- crore was raised. The government has set a target to collect Rs40,000 crore through disinvestment during the current year.
“We took the existing market price, a fundamental analysis of the company and feedback we received during roadshows while fixing the price,” lead managers ICICI Securities managing director Madhabi Puri Buch said.
Disinvestment secretary Sumeet Bose said the government is always committed to fair valuation and the pricing is an effort towards the same.
The company, a leader in engineering consultancy, had an order book of Rs6,236 crore as on 31 March 2010 and operates majorly in the hydrocarbon sector, offering end-to-end solutions in engineering and design.
“We work from concept to commissioning and are already diversifying into infrastructure, power, waste water management and city gas pipelines,” EIL chairman and managing director A K Purwaha said.
Apart from the domestic operations, EIL has also presence in the middle east (west Asia) and Africa and is betting big on Latin America, with specific focus on Venezuela, where the oil exploration activity is witnessing a surge, Purwaha added.
The company, which posted a net profit of Rs114.56 crore in the April-June quarter, has witnessed an annual growth of 47% in revenues and profit after tax in the last three years, he said.