Opportunity in buying NTPC 220 Call Option......
Govt wants to sell approx 4 Cr shares of NTPC (5% stake) and raise Rs11-12K Cr, it means they have to sell the shares at around Rs240 and the current market price of NTPC is Rs216. Finance minister will meet on Feb 1st to decide on the price at which they will sell the shares. If price turns out to be Rs240, you can gain minimum 200-300% in (NTPC 220 Call Option) just 2-3 days!!! In worst case if price turns out to be cmp then also you don't have to lose anything.
News Update....
The battering of NTPC’s share price in the past few days has put the government in a quandary. While, initially there were plans to raise anywhere between Rs 11,000-12,000 crore through a follow-on offer (FPO) of 41.23 crore shares by selling 5% of the nation’s biggest utility NTPC. If we go by the current market price of Rs 216, it will fetch the government not more than Rs 9,000 crore.
NTPC shares closed down 3%at Rs 216 on Wednesday. Out of the total issue, 20.5 crore shares will be reserved for institutions, 42.7 lakh shares for NTPC staff and the rest for Indian investors, according to the share sale document. The issue will open from February 3 and close on February 5.
The empowered group of ministers headed by finance minister will meet on February 1 to approve the price. While the government’s optimism came from what some of the private power generators have been able to do, weak market conditions just before the large FPO proved to be a bottleneck.
Risk: Market slide may hit NTPC issue
The recent sell-off that has shaved off 1,350 points from the sensex, is also expected to affect NTPC divestment through a follow-on offering which
Eventually the market's slide could also lead to lower divestment proceeds for the government. Since touching its recent high at Rs 242 on the BSE on December 31 -- just when the government was finalising its overall divestment plans -- the stock has lost nearly 11% to its current close at Rs 216. So pricing the issue right will be tricky for the merchant bankers.
-JK, Lead Associate, SLT
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