HUDCO Shares Fall Highest In A Year After Govt Kick Starts OFS To Sell 7% Stake

The share price of Housing and Urban Development Corporation Ltd. (HUDCO) fell almost 9% on Wednesday after the government shared via an exchange filing on Tuesday that it would sell up to 7% stake in the housing finance company via an Offer for Sale (OFS).

HUDCO shares were seen trading 8.75% lower at Rs 82.05 per share at 10:24 am IST today. At the current share price, the company has a market cap of Rs 16,425.59 crore.

The Central government has proposed to sell up to 14,01,33,000 equity shares, representing 7% of the total paid-up equity share capital of the state-owned housing finance company Housing and Urban Development Corporation (HUDCO) via an offer for sale (OFS).

The floor price for the offer has been fixed at Rs 79 per share. On Tuesday, HUDCO shares closed 0.36% higher at Rs 89.92 on BSE. The offer price is at a 12% discount to the current market price.

The offer will kick-start today (Wednesday), which is the 'T' day, where only non-retail investors can place bids for the shares. On T+1 day, i..e October 19, retail investors will be allowed to bid for shares and those non-retail investors who opt to carry forward their unallotted bids can also participate.

Under the OFS, the government will sell 7 crore equity shares, representing about 3.5% of the equity with an an option to additionally sell up to 7,00,66,500 equity shares (equivalent to a 3.5% stake) of the company in the event an oversubscription option is exercised.

The OFS will happen during trading hours on a separate window of the Indian bourses.

As per the OFS guidelines, those non-retail investors who have placed their bids on T-day and have opted to carry forward their unallotted bids to T+l day will be allowed to carry forward and also revise their bids on T+1 day.

Around 10% of the offer is solely reserved for allocation to retail investors subject to the receipt of valid bids.

According to the regulatory filing, the allocation will be made at or above the floor price on a price priority basis at multiple clearing prices, barring the case of retail investors, who will be allowed to bid at the cut-off price.

IDBI Capital Markets and SBICA Securities have been appointed as the brokers for the offer.

The government owns close to 81.81% in HUDCO, and the sale of a 7% stake may help it to raise approximately Rs 11 billion. If the entire 7% stake is sold in the OFS, the government's stake in the company will come down to 74.8%, below the mandated 75% mark.

According to a report, so far, the Union government has garnered Rs 69.5 billion by offloading shares in PSUs in 2023/24, against the target of Rs 510 billion.

In the last one year, HUDCO shares have gained 128%, while the stock's year-to-date (YTD) performance is up 53.70%.