ONGC scrip soars after government nod for stake sale

The scrip of state-owned exploration major Oil and Natural Gas Corp (ONGC) Wednesday soared on the back of the government’s approval to sell five percent stake in the company through a one-day auction slated for March 1.

The company’s scrip at the Bombay Stock Exchange (BSE) jumped 5.23 percent to hit an intra-day high of Rs.298.40 a share before slipping to Rs.293.90 at 3 p.m.

The company said in a regulatory filing to BSE that 427,774,504 equity shares would be on sale March 1 starting at 9:15 a.m. and closing at 3:30 p.m. on the same day (Thursday) with a floor price of Rs.290 per share.

Post-auction, the government’s share in the company will come down to 69.14 percent.

An empowered group of ministers (eGoM) led by Finance Minister Pranab Mukherjee had Tuesday approved the stake sale of the energy explorer after a gap of nearly nine months when it offloaded five percent stake in Power Finance Corp garnering Rs.1,145 crore.

The ONGC stake sale is expected to fetch the government $2.5 billion (over Rs.12,000 crore), helping the government bridge the divestment target gap. It had hoped to raise Rs.40,000 crore this fiscal through sale of its stakes in listed state-run companies.

But tough market conditions and a policy paralysis resulted in many of the key proposals not going through.

The National Stock Exchange said it would be holding a mock trading session Wednesday to gear up for the ONGC auction.