NHPC shares drop 5% on government's plan to sell 3.5% stake via OFS, aiming for ₹2,300 cr.

On 18 January, NHPC, a state run hydropower producer, faced a 5% drop in its shares after the government announced its plan to sell a 3.5% stake through an Offer for Sale (OFS). The floor price for this sale was set at ₹66 per share, presenting a discount of over 9% from the closing price on the previous day.

Stock had shown a positive trend the day before, with a 1.2% increase, closing at ₹73.25. This surge coincided with a general upward movement in other public sector undertakings (PSU) stocks. However, as of the morning of 18 January, NHPC shares were trading at ₹69.70.

Offer for Sale Details

OFS for NHPC opened on January 18 for non-retail investors, with retail investors set to participate on Friday. The government aims to sell over 25 crore equity shares in NHPC, with a green shoe option to sell an additional 10 crore shares, all at a floor price of ₹66 per share. The government is expected to gain around ₹2,300 crore from the stake sale.

Retail investors, who are interested in participating in the offer and plan to bid for shares must ensure that the total value of their bids does not exceed ₹2 lakhs. If the demand exceeds the available shares, the government reserves the right to sell an additional 100,450,348 shares, this additional sale would represent 1% of the total paid up capital of the company.

Financial Snapshot

NHPC reported a consolidated profit of ₹1,546 crore in Q2FY24, representing a 0.7% YoY increase. Revenue from operations also showed growth, rising by 11.6% YoY to ₹2,931.3 crore for the quarter ending September 2023.

NHPC's performance in recent times has been noteworthy. Over the past month, there has been a moderate increase of 5.63%. Looking at a slightly longer horizon, the stock has seen a rise of 52.03% in the past 6 months and stock rose 65.04% over the past year. Taking a broader view, NHPC has shown remarkable progress over the past 5 years, with surge of 175.94%.

Final Words

As part of the OFS, the government plans to sell over 25 crore equity shares in NHPC, with a green shoe option for an additional 10 crore shares, all at a floor price of ₹66 per share—a discount of 9.66% over Wednesday's closing price. The move is expected to generate ₹2,300 crore funds for the exchequer.