InvestorQ : Is it true that the government is also planning to divest part of its stake in SAIL?
diksha shah made post

Is it true that the government is also planning to divest part of its stake in SAIL?

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4 months ago
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You are bang on target and it looks like the government wants to make the best of the elevated levels of the Sensex to maximize its fund raising through the divestment route at relatively attractive valuations. The stock of SAIL has jumped nearly 3-fold from the lows of March and that gives the government the perfect opportunity to divest a stake.

With the government still lagging behind on its FY21 divestment targets by a huge margin, that is exactly what the government is planning to do. The government has now indicated plans to divest its partial stake in Steel Authority of India Ltd or SAIL up to Rs.2600 core so as to further prop up its divestment revenues before the end of the fiscal year.

Ever since the China steel story began and steel prices started moving up, SAIL has been seeing robust demand and better steel prices. Consequently, SAIL stock has been in the midst of a sharp rally in the last few months. Also steel stocks have been upgraded to their buy list by several global brokers and that has also kept the stock buoyant.

The proposed offer for sale or OFS will consist of 20.65 crore shares of SAIL at an indicative OFS price of Rs.64 which will represent nearly 5% of the outstanding equity of SAIL. However, the government has decided that it will also retain the right to sell an additional 5% based on investor appetite. This will take the total size to Rs.2600 crore via 10% OFS.

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