The cabinet on Thursday cleared the proposal to divest 10% government stake in Indian Oil Corporation (IOC), a move expected to garner around Rs 3,750 crore to the exchequer at the current market price. The government at present holds 78.92% stake in IOC.
The IOC scrip closed at Rs 195.75, down 4.84% on the BSE on Thursday. At current market price, the sale of 10% stake or 19.16 crore shares would fetch the government Rs 3,750 crore..
The disinvestment department of the government has already selected five merchant bankers — Citibank, HSBC, UBS Securities, SBI Capital and J M Financial — to manage the stake sale of the oil major.
IOC is the nation’s largest oil refiner and has a market capitalisation of Rs 54,519 crore. It posted a net profit of Rs 5,005 crore in 2012-13, up from Rs 3,954 crore in the previous year.
The company’s profit peaked at Rs 10,221 crore in 2009-10. IOC sells fuel at below-market prices, for which it is partially compensated by the government.
The government’s disinvestment target through PSU stake sales in the current financial year is Rs 40,000 crore. So far, it has managed to raise only around R929 crore through stake sale in MMTC, Hindustan Copper and National Fertiliser.