Hindustan Copper stock slumped further on Wednesday on Dalal Street apparently reacting to continued unconfirmed reports on the so-called sharp discounts to the market price concept to be applied for the public sector company's proposed FPO valuation.

According to market insiders, extremely low float stock has been a speculators' delight in the past three quarters.

“Before June last year, when the FPO process was not set in motion, it was unrealistically high valued and after that it has been declining without much relationship with the company's fundamentals,” said a metal analyst with an overseas fund.

Incidentally, according to the company sources, in the pre-FPO road shows in the UK, Australia, East and South East Asian markets investors had shown keen interest in the proposed share offer.

Merchant Banking sources said the initial indicative valuation reports has been placed before the issuers – the company and the Government – in December. The preliminary reports from the investment bankers, appointed for the job, were based on two valuation methods – discounted cash flow and EV-EBIDTA. “We have stuck to the fundamentals of the company and nothing otherwise”, said an official of an investment banker to the issue.

A Union Ministry of Mines source said: “The final decision on the timing and offer price would be taken by an empowered group of ministers.”

If the FPO process reaches an advanced stage by the end of this month, then the road shows may start in February and it may complete before the 2011-12 Budget announcement. “Otherwise it may get delayed and take place in the first quarter of 2011-12,” the source explained.

Mr Shakeel Ahmed, CMD of Hindustan Copper, told Business Line that he has no comment on the issue price or timing.

But he clarified that the mention of the total issue proceeds ballpark figure of Rs 4,000 crore was made to give a broad idea of resource mobilisation possibility. “That was before June, and it did not have any reference to either the market price then prevailing or a fair price based on a due diligence exercise.”

Around that time the market price was over Rs 400.

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