NHPC Shares Tumble As Govt Initiates Process To Sell Stake In PSU Company; Check Floor Price, Date Here

The share price of mid-cap PSU stock NHPC Ltd tumbled 4.02% at Rs 70.12 per share at 10:24 am IST on Thursday (Jan 17). The slump in NHPC stock price was seen a day after the government proposed to sell a partial stake in a renewable energy major via an offer for sale on Thursday and Friday. The energy major has set the floor price of the OFS at Rs 66 per share. The company has a market capitalization of Rs 70,435.78 crore.

The government is planning to sell 251,125,870 shares, equivalent to a 2.5% stake in NHPC. On Wednesday, shares of NHPC ended nearly 1% higher on the NSE at Rs 73. The OFS will open for subscription to institutional investors on Thursday, and for retail investors on Friday. A minimum of 25% of the offer has been reserved for mutual funds and insurance companies, while 10% for retail investors.

Power stocks have rallied significantly over the last one year, helped by the strong demand, capacity additions, and the government's increased focus on renewable energy.

As of December-end, the government-owned a 71% stake in the PSU giant.

In an exchange filing on January 17, the company said, "The Seller (The President of India, acting through and represented by the Ministry of Power, Government of India) proposes to sell 2.50 Yo of the paid-up equity (equivalent to 251,125,870 equity shares) shares held in the company having a face value of Rs 10/- each on January 18, 24 ("T day") (for non-Retail investors only) and on January 19,2OZ4 ("T+l Day") (for Retail Investors "and fo, non Retail Investors who choose to carry forward their un-allotted bids) (with an option to additionally sell up to 100,450,348 equity shares i.e. 100% of the paid-up equity of the company (the "oversubscription option") (hereinafter be referred to as "offer shares".) In case the oversubscription option is not exercised, the equity shares forming part of the Base Offer Size will hereinafter be referred to as, Offer Shares" through a separate, designated window of the NSE, collectively representing 351,576,21g equity shares (3.50%) of the total paid-up equity share capital of the company as on December 31, 2023 (heid i; dematerialized form in one or more demat accounts with the relevant depository participant) in accordance with the OFS Guidelines(such offer for sale hereinafter referred to as the ..Offer;)."

"Such number of equity shares as would be equivalent to up to 3.00% of the Offer Shares may be offered to eligible employees of the Company subsequent to completion of the offer, subject to approval from the competent authority in accordance with the applicable laws (the "Employee offer). The eligible employees may apply for equity shares up to Rs 500,000. However, any bids by eligible employees will be considered for allocation, in the first instance, for an amount up to 1200,000 only," it added.

Floor Price:

The floor price of the Offer shall be Rs 66.00/-(Rupees Sixty Six only) per equity share ("Floor Price"). At the floor price, the OFS would approximately fetch the exchequer about Rs 2,300 crore.

OFS Reservation for mutual funds

The allocation to the non-retail Investors shall be at a price equal to the Cut-Off Price or higher as per the bids. "A minimum of 25% of the Offer Shares shall be reserved for mutual funds and insurance companies, subject to receipt of valid bids at or above the Floor Price (defined below). In the event of any under subscription by mutual funds and insurance companies, the unsubscribed portion shall be available to other bidders," the company said in an exchange filing.

Government's divestment in PSU stocks this fiscal:

So far in the current fiscal year, according to the Economic Times report, the government has raised a little over Rs 10,000 crore via disinvestment. The last OFS that it did was in SJVN in September, where it raised Rs 1,349 crore.
The government has sold stakes in Coal India, Hindustan Aeronautics, Housing and Urban Development Corporation, IRCON International, Rail Vikas Nigam, and SJVN through OFS aided by the strong momentum in equities.

NHPC share price performance:

In the last one year, NHPC shares have gained 67.03%. The last six months and three months' performance of the stock is up 54.24% and 35% respectively. The returns from shares of NHPC Ltd have gained 125.02% in last two years, and 188.20% in the last three years.

About NHPC Ltd:

NHPC Ltd is a Mini-Ratna Category-I Enterprise of the Government of India. The Company is one of the largest organizations in the field of hydropower development in the country. The Company is a hydroelectric power generating company dedicated to the planning development and implementation of an integrated and efficient network of hydroelectric projects in India. They execute all aspects of the development of hydroelectric projects from concept to commissioning of the projects. NHPC Ltd was incorporated on November 7, 1975, as a private limited company under the name National Hydro Electric Power Corporation Pvt Ltd. On April 2, 1986, the company was converted into a public limited company.