The Hindu Business Line : PSU stake sale could raise Rs 45,000 cr

BL Research Bureau An amount of Rs 45,000 to Rs 53,000 crore. That’s the rough estimate of the sums that could be raised through sale of stake in select central PSUs over the next year, if the proposals mooted in the recent weeks go through.

This amount is sizeable, as the cumulative proceeds raised till date from the divestment programme kicked off in 1991 are only Rs 53,400 crore, .

The UPA Government, voted to a second term, has sought to revive plans for the divestment of minority stake in government-owned companies put on the back-burner last year. About nine PSUs may make it to the market over the next few months, going by the indications from the respective Ministries.

More than half of the proceeds may come from just two high-profile offers - a 10 per cent stake sale each in BSNL and Coal India.

The telecom behemoth BSNL is the most valuable PSU lined up for divestment.

At Rs 300-400 a share, the company’s total worth was pegged between Rs 1,50,000 crore andRs 2,00,000 crore ($31-42 billion), in a valuation exercise cited by the Telecom Minister last year.

Though that is much lower than the original expectations of $100 billion quoted at the height of the bull market, it is realistic given the prevailing market valuations for its nearest rival, Bharti Airtel.

Bharti Airtel enjoys a current market capitalisation of Rs 1,54,000 crore. BSNL, with a subscriber base of 84 million mobile and landline users, reported profit of Rs 3,009 crore on revenues of Rs 38,052 crore for 2007-08.

Mining giant Coal India could raise Rs 8,500-10,000 crore for a 10-per cent stake, if it manages to command a price earnings multiple of 9-11 on current earnings, which is normal for mining companies.

Similar estimates based on peer group valuation suggest that stake sales in smaller government companies such as NHPC, RITES, Oil India and United Bank may bring in another Rs 6,100 crore–Rs 6,850 crore.

Further dilution of holdings and fresh offers by already listed PSUs such as BHEL, Power Grid Corporation and Rural Electrification Corporation are also likely to contribute Rs 16,000 crore, based on their current market prices.

Some of the PSUs plan fresh issues of shares, apart from putting a portion of government holdings on the block.

Funding capex

Not all of the money raised from the offers would, however, flow into the exchequer. Part of the proceeds from the already listed companies (REC and Power Grid, for instance) as well as the new debutants would go back to the companies and are likely to be utilised to fund capital or business expansion programmes.

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