The forthcoming public offers of CIL and SAIL can be a roaring success if the debut history of 28 PSUs since 2003 is any indication, as 94 per cent of these public sector companies listed with a premium of at least 10 per cent on the bourses.
An analysis of 28 PSU stake sale offerings, starting from UCO Bank in 2003 to Engineers India Ltd in 2010, shows that in comparison to the total issues, 63 per cent of the offerings have generated significant value for investors over the issue price as of September 29.
The analysis by investment banking Enam Securities concludes that although the gains registered by most of the PSUs on listing were not exorbitant, the majority of the offerings have provided over 10 per cent listing gains (17 out of 26 companies), with 10 companies registering over a 20 per cent gain on listing.
Moreover, PSU offers generally provide special discount for retail investors (usually 5 per cent), which is an added attraction for PSU share offerings, Enam said.
"Unlike the general belief, history proves that PSU IPO's have always left something on the table for retail investors to cheer upon," it said. However, three PSUs (NHPC, NMDC and SJVN) -- which hit the market during the last 13 months -- were trading below their listing price as of September 29.
"If we exclude these companies, considering their limited performance history, we arrive at a conclusion that all PSU offerings in the medium to long-term have offered significant positive returns, irrespective of listing day performance," the report said.
In the list of 28 companies, two entities (PNB and Allahabad Bank) suffered losses on debut listing, but even these companies' shares have gained 175 per cent over their listing price as of September 29.
Aiming to raise Rs 40,000 crore (Rs 400 billion) through PSU disinvestment this fiscal, the government is divesting its stake in many state-owned firms, including Coal India, this financial year.
The government also plans to sell a 5 per cent stake in Oil and Natural Gas Corporation and 10 per cent in Indian Oil to raise about Rs 21,000 crore (Rs 210 billion) this fiscal. The government had mopped up about Rs 2,000 crore (Rs 20 billion) in the first half of the current financial year through disinvestment.
The public offers of Power Grid Corp and SAIL are likely to hit Dalal Street in the next two months.
