Share price tumbles nearer to offer price

LIC has once again come to the Government’s rescue in its disinvestment programme. It has bought a little more than half the shares that were on sale in the State-owned MMTC.

MMTC’s latest shareholding pattern shows LIC’s holding in the company has jumped to 4.81 per cent. It earlier held no shares.

MMTC had offered 9.33 crore shares in June to bring down the Government stake from 99.33 per cent stake to 90 per cent. Currently, LIC holds 4.81 crore shares, which translate to 51 per cent of the total offering in the disinvestment.

The Government had divested its stake at Rs 60 a share, a discount of 72 per cent to the then prevailing price of about Rs 210.

Attracts Retail buy

It seems that the steep discount also attracted retail investors. Over 10,000 fresh investors bought MMTC shares in the quarter, controlling about 1 crore shares. This increased their stake to 0.93 per cent in the company.

At the end of March, retail investors’ stake stood at 0.25 per cent or 25 lakh shares.

Financial institutions and corporate bodies also bought shares on offer. MMTC’s share price is nearly that of the offer price.

On Friday, the MMTC stock closed at Rs 61.80, against the offer price of Rs 60 on the BSE.

The stock has been hitting the lower circuit ever since the offer was made.

In fiscal 2012-13, MMTC reported a loss of Rs 70.62 crore due to 57 per cent decline in total revenues compared with previous fiscal. The company had reported a profit of Rs 70.72 crore in 2011-12.

badrinarayanan.ks@thehindu.co.in

(This article was published on July 12, 2013)
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