ONGC Offer for Sale: The Union government has decided to sell 1.5 per cent stake in Oil and Natural Gas Corporation through an offer for sale (OFS). Oil and Natural Gas Corporation’s (ONGC’s) offer for sale (OFS) garnered strong response from non-retail investors. Today, the ONGC will be open for share sale to retail investors today, March 31, 2022. Close to 19 million shares, worth Rs 300 crore, reserved for retail investors will be auctioned on Thursday. The unsubscribed shares in the retail category, if any, will be allotted to non-retail investors.
Here’s all you need to know about ONGC offer for sale before investing
ONGC OFS: Price Band, Other Key Details
The Union government’s offer to sell 94.3 million shares or 0.75 per cent stake in the public sector oil and gas company would open for non-retail investors on March 30. The offer to sell an additional 94.3 million or 0.75 per cent would open for retail investors on March 31. The floor price for the sale has been set at Rs 159, at about 7 per cent discount from the stock’s closing price of Rs 171 on March 29.
ONGC OFS: Who can Invest, Reserved Portion
In the ONGC stake sale, a minimum of 25 per cent of the shares are reserved for mutual funds and insurance companies while 10 per cent earmarked for retail investors. Retail investors are defined as individual investor who bids for not more than 2 lakh shares. ONGC employees can apply for equity shares worth up to Rs 5 lakh each, the filing said, adding that 0.075 per cent of equity shares sold in the OFS would be offered to eligible employees at the cut-off price. The government owns a 60.41 per cent stake in ONGC which produces half of India’s oil and gas.
ONGC Shares: Should You Buy?
Sonam Srivastava, founder at Wright Research, said: “The shares will be available at Rs 159 in the Offer for Sale, which is a 7 per cent discount from a previous closing price of Rs 171. ONGC being for the short term and with the slight discount that this OFS is offering could be an attractive buy. But this being a PSU stock and there being a case of crude oil prices cooling off after the Russia-Ukraine crisis, one needs to be cautious.”
Avishek Datta, research analyst at Prabhudas Lilladher, suggests that “One should buy ONGC at CMP given that crude oil and gas prices are likely to remain high.”
The Comptroller and Auditor General of India, had last week, said that India lost 3.8 million tonnes of crude oil worth Rs 11,276 crore in four years due to less than planned water injection by ONGC in its western offshore fields.
The Centre has been able to garner around Rs 45,485.87 crore through proceeds of divestment and dividends combined, as of January 2022. The divestment target for the fiscal year 2022, though initially was set at Rs 1.75 trillion, was later lowered to Rs 78,000 crore in the Budget 2022.
Union finance minister Nirmala Sitharaman had in her previous budget for 2020-21 set a target of raising Rs 2.1 lakh crore from privatisation and sale of minority stakes in state-owned firms. The divestment, before the close of the financial year on March 31, comes after the government deferred an initial public offer for the country’s largest insurer Life Insurance Corp. to next year due to market volatility.
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