New Delhi: State-owned Indian Oil Corp (IOC) has opposed the government move to sell 10 percent stake in the company as it believes that the share price is "unduly depressed" currently.
IOC scrip closed at Rs 213.20 on the BSE, 45 percent below the 52-week peak of Rs 375 reached on January 18.
"We had given our inputs (on the disinvestment) in October... We believe prices are unduly depressed at this point of time," IOC Chairman R S Butola told reporters here.
The Department of Disinvestment (DoD), which is looking at mopping up Rs 40,000 crore from the sale of shares in public sector units this fiscal, has raised about Rs 1,325 crore so far. It plans to start a three-nation roadshow this month to attract foreign investors for the IOC stake sale.
The sale of 19.16 crore IOC shares at the current price would fetch the government about Rs 4,000 crore. Government held 78.92 percent stake in the country's largest oil refiner as on June 30.
The government, Butola said, may be looking at assessing the market conditions at the roadshows and will take a view on the stake sale based on the response.
"They (government) would like to assess the market conditions and response for themselves," he said. "Government decision (on disinvestment) is still awaited."
Originally, the roadshows were to be held from October 6 but were put off following opposition from IOC and the Oil Ministry which held that the country's crown jewels cannot be sold at low prices.
Oil Secretary Vivek Rae had on October 1 stated that his ministry favours calling off the roadshows because "if the timing is not right for disinvestment, what is the point of having roadshows?
"They have their own target for disinvestment. We cannot at the same time sell an IOC share at Rs 200".
He had said: "You have to balance out the need for mobilising Rs 40,000 crore from disinvestment along with the fact that you cannot sell your crown jewels at low prices."
Citibank, HSBC and UBS Securities are among the five merchant bankers selected to manage the IOC share sale.
Butola in his inputs on the disinvestment had told the government that the timing was not right due to the "prevailing uncertain environment".
A share sale under present conditions could fetch a low price and would further dent IOC's efforts to raise loans for crude oil imports.
Butola had written: "Current share price of IOC, already undervalued, may not fetch the fair value in the prevailing uncertain environment and investors in all probability are likely to factor in huge discount in their assessment of share price."
He said today that there may be an upside in the share price if the government were to accept the Kirit Parikh committee recommendation on fuel pricing which seeks to address current uncertainties such as lack of a transparent subsidy-sharing mechanism and fluctuation in profitability.
First Published: Friday, November 08, 2013, 23:34