Hindustan Copper's Offer for Sale (OFS) opened for retail investors today, following a strong response from non-retail investors. The government plans to divest a 3% equity stake, with an additional 3% as a green shoe option, at a floor price of Rs 514 per share, totaling nearly Rs 2,982 crore.
The OFS, which opened for non-retail investors on August 4, saw robust participation despite the floor price being set at a discount of over 3% from the previous closing price of Rs 531.40 on the NSE. Retail investors can participate through the OFS window on NSE and BSE between 9.15 am and 3.30 pm, with a minimum of 10% of the offer size reserved for them.
Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, noted that while retail investors might be drawn by the initial discount, the actual price they receive is influenced by the institutional book. He emphasized that the floor price of Rs 514 is not necessarily an entry price, as the discount may not be available if the non-retail book clears above it.
“Retail bids open on Wednesday, but the price they actually get is decided on Tuesday by the institutional book.”
Vaqarjaved Khan, Senior Fundamental Analyst at Angel One
Hindustan Copper reported a significant Q1 profit increase of 163% YoY to Rs 353 crore, with margins near 54%. The company plans to expand its capacity to 12.2 MTPA by FY30, supported by Rs 7,189 crore in investments. However, Khan pointed out that the margin improvements are largely due to copper prices rather than operational efficiencies.
The government's divestment strategy continues with this OFS, following recent stake sales in other PSUs like LIC, Coal India, and NHPC. Hindustan Copper's shares have shown strong long-term performance, gaining 125% in one year and 354% over five years, with a current market capitalization of Rs 51,388 crore.
“Bid if you want to own copper for three years. Don't bid for a two-day gain that may not exist.”
Vaqarjaved Khan, Senior Fundamental Analyst at Angel One
Background
The government's divestment strategy has been a key focus, with recent stake sales in PSUs like LIC, Coal India, and NHPC. Hindustan Copper's strong financial performance and expansion plans provide a backdrop to this offering.
As the OFS progresses, investors should closely monitor the institutional book's pricing to assess potential benefits. The outcome of this offering will be a key indicator of investor sentiment towards government divestments in the current market environment.
