Shares of Hindustan Copper tanked 20 per cent to hit its lower circuit limit on a day the government sold its 4 per cent stake at huge discount of 41 per cent over its previous close.
The stock opened on a weak note on the BSE and then slumped 20 per cent and got stuck at Rs 213.05.
In a similar move, on the National Stock Exchange the share opened weak and then fell 20 per cent to hit its lower circuit limit of Rs 212.95.
"Although HCL is the only vertically integrated copper producer in India, the stock is currently trading at an expensive valuation due to low free float (0.41 per cent of its market cap). Even at a floor price of Rs 155... is expensive compared to its peers," Angel Broking said in a research note.
Kick-starting its disinvestment programme, the government today sold its 4 per cent stake in Hindustan Copper.
A total of 3,89,12,793 shares, worth Rs 603.14 crore, were bid for at the close of trading hours, according to data available from the stock exchanges.
A total of 3,70,08,720 shares, or 4 per cent stake, were put on offer in the first tranche.
The shares were offered at Rs 155 apiece, a 41 per cent discount to yesterday's closing price of Hindustan Copper (HCL) on BSE, Rs 25.
Following the slump in the share price, the market capitalisation of the company shrunk by a whopping Rs 4,925 crore to Rs 19,711 crore, in just a single trading session.
The market capitalisation of the company stood at Rs 24,636 crore yesterday.
The government plans to sell up to 9.59 per cent of its 99.59 per cent stake in the company through the offer for sale route, if it feels the response is good.
Stake sale in marks the beginning of the government's disinvestment plan which is targeting Rs 30,000 crore in this fiscal year (2012-13).
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