Engineers India Offer for Sale (OFS) at 5% discount-Should you invest?

Engineers India OFS Jan 2016Engineers India Offer for Sale (OFS) – Should you invest?

Engineers India, Offer for Sale (OFS) would open on Friday i.e. 29th January, 2016 only for 1 day. Engineers India would be the 5th company to hit the markets under the government's disinvestment programme of 2016. The government is selling 33.7 million shares or 10% stake, in a public offer through offer for sale (OFS) or auction route. Engineers India share price was at Rs 194.05 on Thursday, today at the BSE (Friday) and Govt. of India has fixed the floor price at Rs 189 (2.6% less) and it is announced few hours back at BSE Website. Retail investors would get a 5 % discount on floor price. Should you invest in Engineers India OFS?

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Details of Engineers India OFS

  • Engineers India Ltd Offer for Sale would open only for one day, i.e. Friday 29th January, 2016
  • It would open at 9:15 am and closes at 3.30pm through separate windows of BSE and NSE.
  • Engineers India share price has closed on Thursday (today) at Rs 194.05 per share at BSE.
  • Govt of India has fixed the floor price at Rs 189 which is 2.6% lower than Friday's share price through its announcement to BSE.
  • Retail investors would get the discount of 5% on floor price. Means, they would get shares at Rs 179.55 per share.
  • Govt of India is planning to sell overall 10% stake for which it would get Rs 636 Crores.
  • 20% of such shares is reserved for retail investors.
  • Retail investors can apply through their stock brokers / demat account for this OFS.
  • The government currently holds a 69.4 % stake in Engineers India. After the 10 % stake sale, its stake would reduce to 59.4%.

What is the purpose of the Engineers India Offer for Sale (OFS)?

Govt. Of India plan to divest in several PSU companies. Dept of Divestment has been given a target of Rs 69,500 Crores for PSU divestment for financial year 2015-2016, however, till date it sold only in 4 companies to the tune of Rs 12,700 Crores. This target contains Rs 41,000 Crores from minority stake sale and the balance from the strategic stake sale. Minority stake sale happens through Offer for Sale (OFS).

How do you get a 5 % discount through this OFS?

Govt of India has fixed the floor price at Rs 189 which is 2.9% lower than Thursday’s share price. Retail investors would get the discount of 5% on floor price, i.e. effective price is Rs 179.55. 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.

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How is Engineers India stock price moved in last 12 months?

  • On Thursday, 28th January, 2016, Engineers India stock price closed at Rs 193, down by 5.5%
  • The 52-week high of the share was Rs 252 and the 52-week low was Rs 158.
  • In the last 1 month, it touched high of Rs 252 and low of Rs 192.5.
  • Even in last 1 week, it was as high as Rs 216 and low of Rs 193.5.
  • Currently none of the brokers are recommending subscribing to any IPO or to OFS like Engineers India owning to market volatility. I feel due to high market volatility, one can still get such shares at a lower price then Rs 179 per share in coming weeks. Don’t be in a hurry to buy these OFS shares.

Disclaimer: I am not holding these shares as on 28th January, 2016 and I am not intending to buy these shares during Engineers India OFS scheduled tomorrow.

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Engineers India Offer for Sale (OFS) at 5% discount

Suresh KP

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