Life Insurance Corporation of India (LIC) put in a Rs 6,000 crore bid

for 20

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crore shares of NMDC at Rs 300 apiece on Thursday, persons who did not wished to be named told Financial Chronicle. This virtually ensures smooth passage of the follow-on public offering that closes on Friday.

Reinsurer General Insurance Corporation of India (GIC)

is expected to place its bids on Friday, sources told Financial Chronicle on condition of anonymity.

Thanks to the LIC bid, the FPO got subscribed 79 per cent on Thursday,

after receiving a tepid response on the first day, getting just 17 per cent

subscription.

As per the data available on the National Stock Exchange (NSE)

website, the issue had received bids for 26.09 crore shares as on

Thursday out the total 33.22 crore shares offered. So far, most of the

bids have come at the lower end of the Rs 300-350 price band.

According to NSE data, bids for 26.09 crore shares have come at Rs 300

a share. The second highest number of bids have come at Rs 301 a share

with investors putting bids for 3.51 crore shares. If the same trend

continues, the government will be able to raise Rs 9,966 crore at Rs

300 a share.

The response in the retail segment remained lukewarm with only 3 per

cent of the shares offered getting bids, despite 5 per cent discount

on the issue price. Most retail investors, generally, bid on the last

day.

NMDC issue, where most analysts believe is overpriced even at the

lower band, has got subscribed 1.55 times in the qualified

institutional buyer (QIB) segment, with domestic institutions

accounting for the majority at 1.53 times of the shares reserved for

the category. Foreign Institutional Investors bid for 31.77 lakh

shares.

On Day 2, the NTPC and REC issues had received

subscriptions of 80 per cent and 59 per cent, respectively.

It would be interesting to see whether the NMDC issue goes the REC way

on the final day. REC had ended up with subscriptions of 3.12 times on

the final day and NTPC with 1.2 times.

The government had opted for the book-building method of price

discovery, after its experience with the French auction route in NTPC

and REC issues evoked mixed response.

Analysts at foreign brokerage Macquarie, who have initiated coverage

of NMDC with an underperform rating, are of the view that the present

stock price does not reflect the true value of the company, given the

low free float at just 1.7 per cent. “We value the company on a

sum-of-the-parts basis at Rs 241 per share,” Macquarie analysts Rakesh

Arora and Samidha Gehlot said in a note to clients.

Shares in the company fell over 5 per cent to close at Rs 360.35 on

the BSE, reflecting market expectations that the issue would be priced

at the lower end.

sanjayvijay@mydigitalfc.com