SAIL Share Sale Oversubscribed: 10 Things to Know

The government on Friday sold 5 per cent stake in state-run Steel Authority of India (SAIL) through offer for sale (OFS) route. It will likely raise Rs 1,700 crore from the open market. Post this share sale, the government's stake in the company will come down to 75 per cent. SAIL is India's second biggest steel manufacturer by market value.

Here are 10 things to know about the share sale:

1) SAIL shares ended at Rs 83.50 on National Stock Exchange, higher than the floor price of Rs 83.

2) The retail category was subscribed 2.58 times. Retail investors will get a discount of 5 per cent to the offer price.

3) The general category was subscribed 1.96 times and total subscription was 2.02 times.

4) In total, 26.65 crore shares were on offer. 2.06 crore shares were reserved for retail investors.

5) Most state-run companies have underperformed the broader markets despite a record rally this year. SAIL shares have risen just over 18 per cent this year, lagging a near 36 per cent rise in the Sensex.

6) Analysts say SAIL is a good option for long-term investors. Market expert Ambareesh Baliga told NDTV that long-term investors, with a 2-3 year horizon, should buy SAIL. "India cannot grow at 8 per cent without growth in infrastructure and steel is an important part of infra sector," he said.

7) According to brokerage Maybank, SAIL shares are likely to be under pressure. Earnings will suffer because of the oversupply in the domestic steel market, it said. Maybank has a hold rating on the stock.

8) The response to Friday's share sale in SAIL paves the way for the planned sale of a 10 per cent stake in Coal India and a 5 per cent stake in Oil and Natural Gas Corp. Stake sales in NHPC, Power Finance Corp and Rural Electrification Corp are also in the pipeline.

9) The bigger Coal India and ONGC stake sales should help the government raise a combined Rs 40,000 crore, as per the current market prices.

10) OFS is a form of share sale which facilitates promoters of an already listed company to sell or dilute their existing shareholding through an exchange based bidding platform.