Financial Daily from THE HINDU group of publications
Sunday, Feb 03, 2002
Financial Daily from THE HINDU group of publications Sunday, Feb 03, 2002 |
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Disinvestment Industry & Economy - Disinvestment Bonanza awaits Govt on VSNL, IBP sell-off Our Bureau
MUMBAI, Feb. 2 THE stock market is expecting the Government to earn a handsome premium in the shares prices at which disinvestment candidates VSNL and IBP would find their prospective partners. The market is forecasting Rs 180 - Rs 200 per share for VSNL, while IBP is expected to fetch Rs 800 - Rs 900 per share. On Friday, when most PSU's stocks gained, VSNL closed lower at Rs 156.55, as against Thursday's closing price of Rs 158.15. IBP shares ended at Rs 614.60, up 7.2 per cent on BSE. The Cabinet Committee on Disinvestment is scheduled to decide on the matter, on Tuesday. The Reliance group is widely expected to bag at least one of the two companies, having bid for both VSNL and IBP. In the latter, they have further ensured chances by submitting two bids. Including Reliance's two, IBP merited seven bids for the offered 33.58 per cent, including IOC, BPCL, HPCL and the multinational Shell. VSNL in comparison, found only two interested parties for its tendered 25 per cent equity stake, Reliance meeting competition for the telecom major in the Tatas. IOC seems to be the hot favourite of analysts among bidders for IBP. Analysts feel that based on the discounted cash flow (DCF) method, the current business of VSNL is valued around Rs 180-185 per share. But taking into consideration the recent policy changes - which include opening up of International Long Distance (ILD) telephony for private players - the bidding price could be in the region of Rs 180-200 per share. "Considering the declining prospects of its main business, PSU structure, regulatory uncertainty and fewer business opportunities (not allowed to bid in basic and cellular services bidding process), the stock price should trade at a discount to its value,'' said an analyst with a leading domestic brokerage house. In the run-up for the disinvestment, IBP share has already increased by 50 per cent since the beginning of this year. VSNL shares increased by around Rs 15 over the past fortnight. On the IBP price bids, analysts expect higher premium on the market price, considering it is the first oil PSU up for sale in the wake of sector decontrol scheduled in April 2002. They expect the bid price in the range of Rs 800-900 per share. IBP holds about eight per cent retail market share and has a strong storage and distribution network across the country. This could mean a readily available distribution network.
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