Indian Oil Corporation(IOC) Offer For Sale (OFS) – Should you invest?
Indian Oil Corporation(IOC) Offer For Sale (OFS) at 5% discount-Should you invest?
With good response from Dredging OFS of last week, Govt. of India is planning for Indian Oil Corporation (IOC) OFS on Monday i.e. 24th August, 2015. It would be only for 1 day. Indian Oil Corporation would be the 4th company to hit the markets under the government's disinvestment program this year. The government is selling Rs 9,500 Crores or 10% stake, in a public offer through offer for sale (OFS) or auction route. IOC share price was at Rs 394.45 yesterday at NSE (Friday) and Govt. of India has fixed floor price few minutes back at Rs 387 per share. Retail investors would get 5% discount on floor price. Should you invest in Indian Oil Corporation OFS?
Details of Indian Oil Corporation OFS
- IOC Offer for Sale would open only for one day i.e. Monday 24th August, 2015
- It would open at 9:15 am and closes at 3.30pm through separate window of BSE and NSE.
- Govt of India has fixed the floor price at Rs 387 which is 1.9% lower than Friday's share price through its announcement to BSE. Note that Indian Oil Corporation share price has closed on Friday at Rs 394.45 per share (BSE).
- Retail investors would get the discount of 5% on floor price. Means the price would be at Rs 367.65 (approx) per share for retail investors.
- Govt of India is planning to sell overall 10% stake for which it would get Rs 9,500 Crores.
- 20% of such shares is reserved for retail investors. 25% to mutual funds and domestic insurance companies and balance of 55% to institutional investors, domestic financial companies and foreign funds.
- Retail investors can apply through their stock brokers / demat account for this OFS.
- The government currently holds a 68.57 % stake in Indian Oil Corporation. After the 10 % stake sale, its stake would reduce to 58.57%
- More details about this IOC OFS can be read at BSE announcements at this link
What is the purpose of the Indian Oil Corporation Offer for Sale (OFS)?
Govt. Of India plan to divest in several PSU companies. Dept of Divestment has been given a target of Rs 70,000 Crores for PSU divestment for financial year 2015-2016. This target contains Rs 41,000 Crores from minority stake sale and balance from the strategic stake sale. Minority stake sale happens through Offer for Sale (OFS).
How do you get a 5 % discount through this IOC OFS?
Govt of India has fixed the floor price at Rs 387 per share which is 1.9 % lower than Friday's share price. Retail investors would get the discount of 5% on floor price. When you apply through your demat account, you would be tagged as retail investors and discounted price would be automatically shown to you. If not, please contact your demat stock broker before applying. You cannot make any changes once you apply for that.
How is Indian Oil Corporation stock price in last 12 months?
- On Friday, 21st August, 2015, IOC stock price closed at Rs 394.45 on BSE, down by 0.7%.
- The 52-week high of the share was Rs 465.90 and the 52-week low was Rs 306.75.
- One month back, it traded at a price of Rs 438 per share. Means in one month, IOC stock has fallen by over 10%.
- One week back, it traded at a price of Rs 389 per share . Means, it moved 1% up in last 1 week.
Which stock brokers are recommending to buy IOC stock?
Here is a brokers recommendation in the last few weeks in Aug-2015. This would be helpful in buying IOC Offer for Sale.
- Moneycontrol.com sentimeter shows 79% as BUY and 21% as SELL about IOC Stock.
- Gaurav Bissa of LKP Securities in his recent stock recommendations says “My first recommendation today is a buy on Indian Oil Corporation (IOC), I recommend going long on in the stock. The target for the same would be around Rs 415 keeping the stoploss at Rs 392. Having said that, I would again say similar, not only IOC but Bharat Petroleum Corporation and Hindustan Petroleum Corporation can also see good amount of jump from current levels. All the stocks in our oil marketing companies (OMC) can be kept on radar.
- Chandan Taparia of Anand Rathi Securities recommends buying Indian Oil Corporation with a target of Rs 420-425.
- Edelweiss Research is bullish on Indian Oil Corporation and has recommended buy rating on the stock with a target of Rs 433 in its research report dated August 13, 2015.
- Vishal Malkan of malkansview.com says, "One can buy Indian Oil Corporation (IOC) with a target of Rs 456."
Disclaimer: I am not holding these shares now as of 22nd August, 2015 and I have intent of buying shares during Indian Oil Corporation OFS on 24th August, 2015.
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Indian Oil Corporation Offer For Sale (OFS) at 5% discount