PFC Offer For Sale (OFS) at 5% discount – Should you invest?

Power Finance Corporation(PFC) - Offer for Sale July 2015Power Finance Corporation Offer For Sale (OFS) at 5% discount

Power Finance Corporation(PFC), Offer for Sale (OFS) would open on Monday i.e. 27th July, 2015 only for 1 day. Power Finance Corporation would be the second company to hit the markets under the government's disinvestment program this year after PSU REC. The government is selling 6.6 Crores shares or 5% stake, in a public offer through offer for sale (OFS) or auction route. PFC share price was at Rs 261.65 yesterday at NSE (Friday) and Govt. of India has fixed the floor price at Rs 254 (2.9% less). Retail investors would get 5% discount on floor price. Should you invest in Power Finance Corporation OFS?

Details of Power Finance Corporation OFS

  • PFC Offer for Sale would open only for one day i.e. Monday 27th July 2015.
  • It would open at 9:15 am and closes at 3.30pm through separate window of BSE and NSE.
  • Power Finance Corporation share price has closed on Friday at Rs 261.65 per share.
  • Govt of India has fixed the floor price at Rs 254 which is 2.9% lower than Friday's share price through its announcement to BSE few minutes back.
  • Retail investors would get the discount of 5% on floor price.
  • Govt of India is planning to sell overall 5% stake for which it would get Rs 1,700 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 72.8 % stake in Power Finance Corporation. After the 5 % stake sale, its stake would reduce to 67.8%.

Also Read: 22 Money Saving Ideas which you can implement with simple steps

What is the purpose of the Power Finance 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, however, till date it sold only in PSU REC. 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 OFS?

Govt of India has fixed the floor price at Rs 254 which is 2.9% 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 Power Finance Corporation stock price in last 12 months?

1) On Friday, 24th July, 2015, PFC stock price closed at Rs 261.65, up by 0.6%.

2) The 52-week high of the share was Rs 316 and the 52-week low was Rs 219.

3) In the last 1 month, it touched high of Rs 275 and low of Rs 250.

4) Even in last 1 week, it was as high as Rs 270 and low of Rs 256.

Which stock brokers are recommending to buy PFC stock?

Here is a brokers recommendation in the last few weeks.

1) Precision investment services give a buy recommendation for PFC Shares with a target of Rs 273.

2) Gaurav Rathnaparki of Sharekhan comments about this stock, indicating

“Power Finance Corporation has been in a multi-month consolidation phase and if you look at the last couple of months' price action then we can see a triangular pattern formation. Currently the stock is trading near the lower end of the pattern. So here, for a bounce can surface on the counter, which can last for the next few sessions. From a trading perspective, stop loss can be placed at Rs 251 and target will be Rs 270”.

Also Read: Where Rakesh Jhunjhunwala is investing in July, 2015?

3) Firstcall Research recommended this stock few weeks back indicating,

"During the 4th Quarter of FY15, Loan Assets of the company increased by 15.09% to Rs. 2,175,160 million from Rs. 1,889,950 million. For the quarter end of 31st Mar 2015, Net worth increased by 17.69% from Rs. 322,190 million compared to Rs. 273,750 million for the quarter ended 31st Mar, 2014. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. Over FY2014-17E, we expect the company to post a CAGR of 16% and 12% in its top-line and bottom-line respectively. Hence, we recommend ‘BUY’ for the stock with a target price of Rs 300 on the stock", says Firstcall Research Report.

Disclaimer: I am not holding these shares now as of 25th July, 2015 and neither I intend to buy these shares during Power Finance Corporation OFS.

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Power Finance Corporation Offer For Sale (OFS) at 5% discount

One comment

  1. I read your article and find it more informative and to judge the PFC offer for sale. Looking to the power sector in future I am in opinion to buy the offer in 5% retail discoount .

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