India Eyes 10% Stake Sale in NLC India, Mazagon Dock, and IRFC to Boost FY24 Disinvestment Goals

5 Jan 2024 , 11:16 AM

India’s finance ministry is considering selling up to a 10 % stake in NLC India, Mazagon Dock Shipbuilders, and Indian Railway Finance Corporation through the offer for sale (OFS) route by March 31 to boost disinvestment proceeds for FY24.

The OFS is expected to be conducted from January to March, with a maximum of 10 % government stake to be sold in these public sector undertakings (PSUs). The government aims to space out the OFS transactions to ensure a smoother absorption by the market.

Some stake sales may be reserved for the next fiscal year’s disinvestment, according to a senior official. The official highlighted that while the actual implementation of OFS is not a problem, the disinvestment target is primarily reliant on strategic sales, which have been challenging in the pre-election year.

The government’s disinvestment target for FY24 is Rs 51,000 crore, with Rs 10,051.73 crore already garnered. A 10 % stake sale in NLC India, Mazagon Dock, and IRFC could potentially fetch the government up to Rs 21,200 crore, based on current market prices.

NLC India, engaged in lignite and coal production, has seen an 80 % increase in its shares over the past three months. Mazagon Dock and IRFC have also experienced stock gains of 8 % and 36 %, respectively, during the same period.

The government holds approximately 79 % of NLC’s equity shares, 85 % in Mazagon, and 86 % in IRFC.

Despite efforts, stake sales in fertiliser companies like Rashtriya Chemicals and Fertilizers, National Fertilizers, and Madras Fertilizers are unlikely due to a lack of investor interest. Investors have not shown enthusiasm during roadshows for the planned stake sales in these companies.

Stake sales in General Insurance Corporation of India and New India Assurance Company via OFS are also improbable due to lukewarm investor interest. The finance ministry had aimed to offer at least 10 % each in the two listed public sector insurance companies but faced a lack of traction from investors during preliminary discussions.

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