NLC India LImited IPO

The government is  selling upto 5% stake (3%+2%  green shoe portion)   at a floor price of Rs 94 a piece in Neyveli Lignite (NLC) through a two-day offer for sale beginning 25/10/17, as per media report. The NLC India Limited OFS issue will open for institutional buyers on Wednesday. The OFS  comes after mega OFS of NTPC on 29/8/17 which fetched Rs. 9700 crore to the Government.The 5 per cent stake sale  through NLC India Limited OFS would fetch about Rs ~720 crore to the exchequer.

Close of OFS : Those who bid at  Rs. 96 are likely to get allotment.   NLC India share hit a high of 102.4 today and closed at Rs. 95.6. 

About NLC India Limited OFS
Issue Period25 Oct 2017 to 26 Oct 2017
October 25,  2017 for Non Retail Investors and October 26 ,2017 for Retail Investors and Non Retail Investors who choose to carry forward their bids
Offer Size – No. of SharesTotal including Geenshoe: 7,64,28,421 shares
Base Offer Size –  45857053 shares and Greenshoe Option 30571368 shares
Total Offer Size in Rs.718.43 crore at  Floor Price
Offer Size for Retail InvestorsOffer Size – 1,52,85,684 shares 
~ 144 Crore
Face Value10
Floor PriceRs. 94 with 3.5% discount to Retail
Allocation MethodologyPrice Priority


Retail investors, for whom 20 per cent of the Neyveli Lignite Corporation OFS would be reserved, will get a further discount of 3.5 per cent in the offer for sale (OFS). Retail investors are those who put in bids for less than Rs 2 lakh. 

About NLC India Limited (Neyveli Lignite Corporation) :
  • Neyveli Lignite Corporation (NLC), incorporated in 1956, is the business of lignite mining and power generation. It is a NAVRATNA  company under the Ministry of Coal
  • Neyveli Lignite Corporation is a Miniratna Public Sector Enterprise, under the administrative control of Ministry of Coal. The company also operates subsidiary –– NLC Tamilnadu Power Limited.e

  • Present   Mining  Capacity  :   30.6 MTPA ( Lignite )
  • Present Power Generation Capacity (including JVs) : 3240MW (Lignite), 1000MW (Coal),   10MW (Solar),   51MW (Wind), Total :4301MW

  • Planned Capacity Addition
    Mining
    Lignite31.55 MTPA 
    Coal31.00 MTPA 
    Power Generation(including JVs)
    Lignite Based3540 MW 
    Coal Based5940 MW 
    Solar3990 MW 
    Wind203 MW 
    Acquisition of Power Assets3000.0 MW 
    Total16673 MW 
  • Post-disinvestment, the Government of India’s shareholding in NLC will come down to 84.32%.
Subscription – Non retail Portion:

Government approved disinvestment of 3% equity shares of NLCIL as base offer, with an option to retain oversubscription up-to additional 2% equity shares. Trading for Non-Retail portion took place on 25th October, 2017 at a floor price of Rs. 94. Against the offer size of 3.67 crore, bids were received for 11.63 crore shares, resulting in over subscription by 3.19 times. Government accordingly decided to retain the over-subscription by revising the total offer size from 3% to 5% of equity shares. 

Financials:
A) NLC India Limited Quarterly Results

NLC India LImited Quarterly Results : ( Rs. Cr.)

Particulars

Jun-17Mar-17Dec-16Sep-16Jun-16
Net Sales22542841.861892.472056.671881.84
Total Income2325.73259.191964.212148.281975.57
Total Expenditure1625.32181.341266.591490.411404.07
PBIDT700.41077.85697.62657.87571.5
Interest61.539.8239.0840.949.26
PBDT638.91038.03658.54616.97522.24
Depreciation182.32163.07172.5176.85169.36
Tax68.52-357.2102.93130.05104.45
Deferred Tax71.97-269.3146.949.6517.68
Reported PAT316.091501.47336.17300.42230.75
Extra-ordItems-1.87-122.79-3.2-35.950
Adjusted Profit 317.961624.26339.37336.37230.75
EPS (Unit Curr.)2.079.8221.791.38
Equity1528.571528.571677.711677.711677.71
Face Value1010101010
PBIDTM(%)31.0737.9336.8631.9930.37
PBDTM(%)28.3536.5334.83027.75
PATM(%)14.0252.8317.7614.6112.26


B) Annual Results
(Figures in Rs. Crore):

Particulars

Mar-17Mar-16Mar-15Mar-14
Net Sales11128.047852.396105.385967.97
Other Income735.98522.981086.51018.66
Total Income12300.738743.857396.547059.17
Total Expenditure8379.816661.414422.964151.18
Operating Profit3920.922082.442973.582907.99
Interest588.28467.33149.63181.58
Gross Profit3332.641615.112823.952726.41
Depreciation1043.37910.11440.62517.28
Profit Before Tax2289.277052383.332209.13
Tax-19.78-1.59750.85605.37
Deferred Tax-147.61638.6252.8101.88
Net Profit2456.6667.971579.681501.88
Minority Interest (after tax)9.66-17.600
Net Profit after Minority Interest 244785.571579.681501.88
Extraordinary Items-1032.38114.02231.62-30.3
Adjusted Net Profit3479.38-28.451348.061532.18
Dividend1121.970469.76469.76
Equity Dividend (%)73.4302828
EPS 14.510.518.848.48
Book Value 78.8175.7788.3182.57
Assessment: NLC India Limited OFS
  • The main activity of NLC India is mining (coal and lignite) and power generation of thermal and renewable energy.
  • NLC India key Products/Revenue Segments include Power which contributed Rs 6258.97 crore to Sales Value (93.57 % of Total Sales), Lignite which contributed Rs 401.24 crore to Sales Value (5.99 % of Total Sales) . It has set up a 10 MW pilot solar power plant and now plans to build a 500 MW plant.
  • Power Stocks have been doing reasonably well on the bourses.
  • NLC paid good dividend (~74%- Rs. 7.4) last year.
  • Shares of NLC have been trading in a close range near to  the floor price for quite some time and OFS issue was expected by the market for upto 15% stake sale from 2-3 months. Thus NLC India Limited could exhibit a reasonable level of price support and chances of an upward mpovement are more than a downward trend.
  • NLC India LImited price
  • Reduction of Retail discount from 5% to 3.5% has reduced the differential available to retail.
  • The size of  NLC India Limited OFS issue being small  with retail portion at ~144 crores, allotment at reasonable price in bidding will be difficult.
  • I intend to apply in NLC India Limited OFS to  get a allocation at the most at marginally above the floor price with expectation of reasonable return in short to medium term.

Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.

6 thoughts on “NLC India Limited OFS Review

  1. I applied at the cutoff price and made an application of 2 lakhs but still didnot got any allotment.
    I thought since there was an over subscription of 3 times so I would have got allotment of around 70,000.

    Is there a different methodology for OFS? Please help

    1. In OFS procedure currently followed, the shares though having a cut off price are open for bidding (unlike IPO). Since the shares by people who had bid above Rs 95.8 covered the total shares offered for sale, they got full allotment. You would have got at cut off only if there was insufficient response to the offer or if after allotting shares to those who had bid at a higher price, shares were still left for allotment to those who opted for cut off.

  2. How to know the status of allotment for NLC ofs ? I have applied at the cut off price. please revert how to check ?

    1. No means to check. It is price bidding. Details of bidding at nse and bse sites. No allotment at cut off. Only those above 95.8 got full allotment, rest zero allotment

  3. i have applied for NLC in OFS, but so far i have not got any intimation. No allotment, nor the amount has been refunded back to my account. What is the current status? if shares have not been alloted, then at least amt should be refunded back immediately. Please update me.

    1. how did you apply. By which means, online or through a broker. Only those who bid above rs. 95.8 got shares allotted in their demat the next day morning.

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