REC India smeared in red

REC India is not doing well today, with the stock smeared in red, showing all symptoms of a PSU ahead of its Offer For Sale (OFS). The stock is down almost 4% currently at Rs.322 levels with the counter continuing to look very weak.

The Govt of India, which has 65.64% stake in the company plans to sell a 5% stake in the PSU, hoping to mop up Rs.1600 crore. As usual, the market has beaten down the stock  into the red as the offer price is expected to be at a discount to the current market price.

20% of the offer would be reserved for retail investors, who can bid for shares to the tune of Rs.2 lakh. Retail investors would get shares at a 5% discount to the issue price. 25% of the offer is earmarked to mutual funds and insurance companies.

REC would mark the first PSU divestment of FY16, wherein the Govt has set a target of Rs.41,000 crore through its stake sale in current fiscal.