NLC India OFS: Retail bidding opens; issue sees strong response on Day 1, oversubscribed 5x

The retail bidding for the government’s offer for sale (OFS) of up to a 3% stake in NLC India Limited opened on Wednesday, June 10.

When last seen, the stock was trading 2.79% lower at ₹318.60 apiece on the NSE.

The issue had already seen strong demand from non-retail investors on Tuesday, June 9, the first day of the stake sale.

BSE data showed that the issue was oversubscribed on Day 1, with non-retail investors bidding for shares worth ₹4,158 crore. To be precise, the issue was subscribed 522.20%, or more than five times.

On Tuesday, non-retail investors bid for over 13.03 crore shares at an indicative price of ₹319.06 per share, against the base offer size of 2.49 crore shares allocated for this category.

The government is selling about 4.16 crore shares, or up to a 3% stake in NLC India (Neyveli Lignite Corporation), at a floor price of ₹303 per share through a two-day OFS.

What are the floor price and indicative price in an OFS?

It reflects the likely clearing price of the issue at that point in time, and is usually compared against the floor price, which is the minimum price set by the seller.

Key details

The stake sale comprises a base offer size of 2%, and an additional 1% greenshoe option in case of over-subscription.

If fully subscribed, the stake sale would fetch about ₹1,200 crore to the exchequer at the floor price.

The floor price represents a 9.73% discount over NLC India's closing price of ₹335.65 a share on the BSE on Monday.

Shares of NLC India closed at ₹327.85, down 2.32% over the previous close on the BSE.

The government currently holds 72.20% in NLC India.

So far in the current fiscal year, the government has mopped up ₹12,166 crore by selling minority stakes in PSUs. This includes ₹5,542 crore from Coal India, ₹4,357 crore from NHPC, and ₹2,266 crore from Central Bank of India.