The follow-on public offer (FPO) of Engineers India (EIL) was subscribed 0.02 times on the first day, with bids coming in only from retail and other non-institutional investors. A little more than 6.8 lakh shares were bid for out of the total 3.369 crore on offer.
Retail investors bid for about 6.7 lakh shares. A discount of Rs 6 per share is being offered to retail investors and eligible employees. Qualified institutional buyers, on the other hand, decided to give it a miss on day one of the three-day issue.
The government is selling 10% stake (3.369 crore shares) at a price band of R145-150 per share. The Centre aims to raise about R500 crore from the issue. After the issue, government's stake in EIL is estimated to fall to 70.4%.
On Thursday, the EIL scrip rose 1.61%, or R2.4, to R151.30 a share. According to Bloomberg estimates, the stock trades at 8.8 times one-year forward price to earnings (P/E) compared with some of its global peers, which trade in the range of 15-20-times forward P/E.
ICICI Securities, IDFC Capital and Kotak Investment Banking are the lead managers to the issue. To bridge the fiscal deficit gap, the government has set its FY14 disinvestment target at R54,000 crore. The Centre has raised about R22,000 crore via Coal India, NHPC, Power Grid, MMTC and four other state-owned entities. The Centre is looking to raise another R32,000 crore by selling stake in HZL, Balco, Indian Oil and SUUTI's stake in Axis Bank.