Oil India (OIL) will list on the exchanges today; fixed its issue price at Rs 1,050/share

2009 September 30
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After receiving remarkable response from the investors, Oil India (OIL) will list on the exchanges on September 30, 2009, Wednesday. It has fixed its issue price at Rs 1,050/share.
It had come out with an initial public offering (IPO) of 264.5 lakh equity shares of face value Rs 10 each and raised over Rs 2,777 crore. The issue saw the highest ever subscription in the year 2009 and was oversubscribed 30.82 times.
Investment Advisor, SP Tulsian said Oil India may list around its issue price of Rs 1,050 while Manish Bhatt of Prabhudas Lilladher and Avinash Gorakshakar, Head of Research at Reliance Money looked a bit optimistic. They said the listing price would be around Rs 1080-1200 and Rs 1090-1100 per share, respectively. Dipan Mehta also said that it would see 3-5% move from its issue price.
When asked about grey market premium, all experts said it was around Rs 35-40 over the issue price of Rs 1,050.
Non-institutional investors’ portion was subscribed 10.5 times. Normally these investors invest in the issue for listing gains and raise money on margin basis. So, about the breakeven price for the high-networth individuals (HNIs), experts said it would be around Rs 30-40 over the issue price
SP Tulsian said on the listing day, it was likely to slip below issue price. “One can consider buying the stock below Rs 1,000 on the day of listing. In the near term, the stock may stabilise around Rs 900-950 per share,” he added.
Manish Bhatt said,”The stock looks good for the long term so one who has a long term vision better stay invested.”
Avinash Gorakshakar said, in the longer term the stock had the potential to touch Rs 1300-1400 levels based on FY11 earnings. However, he said, “If the opening price is below Rs 1100 then it can be a good value for long term investment. The stock will stabilised around Rs 1100-1150 in the near term. One should capitalise by remaining invested in the IPO as the short term gains may not be large but longer term prospects look good.The stock looks strong with long term perspective considering the company’s strong financial track record and increasing asset base.”
Dipan Mehta, Member, BSE/NSE said, the listing would be more or less flat, 3-5% move from its issue price. “What we have seen with the initial public offerings (IPO) which have got listed in this calendar year – more or less they will have one-two days of fantastic volume and maybe flipping of the stocks which the investors have bought during the IPO and then gather into kind of a range. So nothing much to look forward to as Oil India is concerned,” he added.
Krishna Kumar Karwa, Managing Director of Emkay Global Financial Services said, he believed that the issue should list at maybe 10-15% kind of premium to the issue price. “This kind of oversubscription on an Oil India IPO should have positive impact on ONGC, so from a trading perspective we are recommending to our clients that they could possibly take a view on ONGC,” he added.
About the company
Oil India is engaged in the business of exploration, development, production and transportation of crude oil and natural gas onshore in India. It also processes produced natural gas to extract LPG.
OIL is the second largest oil and gas company in India as measured by total proved plus probable oil and natural gas reserves and production (Source: DGH).
The objects of the issue were to fund requirements for fiscal 2010 and 2011 towards exploration and appraisal activities; development activities in producing fields and purchase of capital equipments and contracts for facilities.
The government (the president of India) holds 78.43% of the fully diluted post-issue paid-up equity share capital of company; post the transfer to IOC, HPCL & BPCL and after the issue.

After receiving remarkable response from the investors, Oil India (OIL) will list on the exchanges on September 30, 2009, Wednesday. It has fixed its issue price at Rs 1,050/share.

It had come out with an initial public offering (IPO) of 264.5 lakh equity shares of face value Rs 10 each and raised over Rs 2,777 crore. The issue saw the highest ever subscription in the year 2009 and was oversubscribed 30.82 times.

Investment Advisor, SP Tulsian said Oil India may list around its issue price of Rs 1,050 while Manish Bhatt of Prabhudas Lilladher and Avinash Gorakshakar, Head of Research at Reliance Money looked a bit optimistic. They said the listing price would be around Rs 1080-1200 and Rs 1090-1100 per share, respectively. Dipan Mehta also said that it would see 3-5% move from its issue price.

When asked about grey market premium, all experts said it was around Rs 35-40 over the issue price of Rs 1,050.

Non-institutional investors’ portion was subscribed 10.5 times. Normally these investors invest in the issue for listing gains and raise money on margin basis. So, about the breakeven price for the high-networth individuals (HNIs), experts said it would be around Rs 30-40 over the issue price

SP Tulsian said on the listing day, it was likely to slip below issue price. “One can consider buying the stock below Rs 1,000 on the day of listing. In the near term, the stock may stabilise around Rs 900-950 per share,” he added.

Manish Bhatt said,”The stock looks good for the long term so one who has a long term vision better stay invested.”

Avinash Gorakshakar said, in the longer term the stock had the potential to touch Rs 1300-1400 levels based on FY11 earnings. However, he said, “If the opening price is below Rs 1100 then it can be a good value for long term investment. The stock will stabilised around Rs 1100-1150 in the near term. One should capitalise by remaining invested in the IPO as the short term gains may not be large but longer term prospects look good.The stock looks strong with long term perspective considering the company’s strong financial track record and increasing asset base.”

Dipan Mehta, Member, BSE/NSE said, the listing would be more or less flat, 3-5% move from its issue price. “What we have seen with the initial public offerings (IPO) which have got listed in this calendar year – more or less they will have one-two days of fantastic volume and maybe flipping of the stocks which the investors have bought during the IPO and then gather into kind of a range. So nothing much to look forward to as Oil India is concerned,” he added.

Krishna Kumar Karwa, Managing Director of Emkay Global Financial Services said, he believed that the issue should list at maybe 10-15% kind of premium to the issue price. “This kind of oversubscription on an Oil India IPO should have positive impact on ONGC, so from a trading perspective we are recommending to our clients that they could possibly take a view on ONGC,” he added.

About the company

Oil India is engaged in the business of exploration, development, production and transportation of crude oil and natural gas onshore in India. It also processes produced natural gas to extract LPG.

OIL is the second largest oil and gas company in India as measured by total proved plus probable oil and natural gas reserves and production (Source: DGH).

The objects of the issue were to fund requirements for fiscal 2010 and 2011 towards exploration and appraisal activities; development activities in producing fields and purchase of capital equipments and contracts for facilities.

The government (the president of India) holds 78.43% of the fully diluted post-issue paid-up equity share capital of company; post the transfer to IOC, HPCL & BPCL and after the issue.

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