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REC OFS floor price fixed at Rs 315

Published on Tuesday, April 7, 2015 by Dilip Davda | Modified on Friday, November 1, 2019

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REC OFS floor price fixed at Rs 315

OFS Floor Price

SymbolRECLTD Series - Non RetailIS Series - RetailRS Number of shares being offered for sale4,93,72,950 equity shares Reservation portion for Retail20% of offer size for RS series only Discount to Retail investor bids5% to the bid price for RS series Bidding at cut-off - RS seriesNot applicable (Cut-off not opted by seller) Maximum Bid Quantity4,93,72,950 equity shares Name of the Seller (s)The President of India, acting through and represented by the Ministry of Power, Government of India (promoter) Name of the broker (s) on behalf the seller1.IL&FS Broking Services Private Limited 2.JM Financial Institutional Securities Limited 3. Morgan Stanley India company Private Ltd Face ValueRs 10 ISININE020B01018 Date of offer08-04-2015 Floor PriceRs 315 Market Lot1 Equity Share Tick SizeRs 0.05 OFS Bidding Time09:15 AM to 15:30 PM Name of the stock exchanges where the Orders shall be placedNSE, BSE

While mainboard IPO for the current fiscal opens with VRL Logistics Ltd, PSU divestment exercise begins with REC stake dilution via OFS mode. The offer for sale (OFS) is opening on 08.04.15 on BSE and NSE and will be open from 9.15 am till 3.30 pm on that day i.e. Wednesday. For retail investors, the offer is for 9874590 shares while non-retail offer is for 39498360 equity share of RS. 10 each. Thus total bid quantity is restricted to 49372950 equity shares. Lot size for the offer is 1 equity share and the tick price is Rs. 0.05 paisa per share.

Allocation methodology will be on price priority basis and retail investors will be eligible for 5% discount. Last trading price of the stock is at Rs. 321.65, thus the offer is priced very reasonably and retail investors should not miss this opportunity to invest in this 'Maharatna' in power sector, that is poised for a bright prospects ahead. Selling members to this offers are IL&FS Broking Services Private Limited (Clg code: 3216, JM Financial Institutional Securities Limited (Clg code: 400) and Morgan Stanley India Co. Pvt. Ltd. (Clg code: 457) while the seller promoter is The President of India, acting through and represented by the Ministry of Power, Government of India.

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Author has no plans to invest in this offer.

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About Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com


22 Comments

22. alok  Apr 10, 2015 23:46 I Like It. | Report Abuse Reply
"Retail investors who got it right made an absolute return of 5.5% in RECs OFS issue," says Sumit Bagadia, associate director, Choice Broking. Retail investors, who placed bids at Rs 333.30 and above, got full allotment of 600 shares on their invested amount. After factoring in a 5% discount for retail investors, the net cost to retail investors is Rs 316.65

21. SUMEET  Apr 10, 2015 23:21 I Like It. | Report Abuse Reply
Seen many fellow Retails investors are not aware about there actions. Some bought few shares between 450 - 600.

I also feel Govt. also want to offall its holdings to FII/Institituions. Otherwise they can keep 100 % quota for Retail Investor & if some thing left / unsubscribed can be take by Institutions. Then Indian CPSE wealth will be reaped by retail investors.

Also Govt should ensure that PEPSICO, Laurel, COCA-Cola etc should offcertain shares for Retail / Indian Investors.

Above actions are solicited if Govt of India is really concerned about its Retail investors.
20. dev  Apr 9, 2015 19:27 I Like It. | Report Abuse Reply
375 Ka bid bharne vale ko kya price me share ayega?
19. hardyesh gehlot  Apr 9, 2015 11:41 I Like It. | Report Abuse Reply
INSTITUTIONS HAVE KNOWLEDGE, MONEY POWER AND MEANS TO AFFECT SENTIMENTS AND RETAILS DONT. THEY MOST OF THE TIME FOLLOW THE WHAT THE INSTITUTIONS ARE DOING. IN REC CASE IT WAS AS IF THE RETAILS DID NOT WANT THE 5% DISCOUNT THAT WAS PROVIDED BY THE GOVT , ATLEAST THE FINAL PRICE OF RETAIL AND NON RETAIL SHOWS SO (RETAIL333.3, NON RETAIL327.25) MEANING THE NET EFFECTIVE PRICE FOR RETAIL WILL BE 333.3-15=318.3) WHICH NARROWS DOWN THE DIFFERENCE AT WHICH INSTITUTIONS AND RETAIL WILL BE ALLOTTED SHARES. THIS ONLY REFLECTS THE PROBLEMS OF THE OFS SYSTEM. NO RETAILER WOULD LIKE TO GIVE AWAY EVEN A PAISA PROVIDED BY GOVT. FOR FREE.ALSO THE ISSUE CREATED A WAR OF SORTS AMONG THE RETAIL CATEGORY TRYING TO GRAB THE SHARES IN THE EUPHORIA CREATED NOT KNOWING AND REALIZING THAT THEY CAN EASILY GET CARRIED AWAY AND FACE THE CONSEQUENCES FOR THE SAME. THE INSTITUTIONS WERE SMART TO FULLY SUBSCRIBE THE ISSUE IN THE EARLY STAGE TURNING THE SENTIMENT POSITIVE FOR THE RETAILS AND CREATING A EUPHORIA IN WHICH THE BROKERS DID THERE PART IN FURTHER IGNITING THE RETIAL SENTIMENTS. BROKERS ARE SURE TO EARN THERE BROKERAGE OR INTEREST IN FINANCING THE BIDS OF THE REATIL PEOPLE. IT SEEMED AS IF THE DEMAND FOR REC STOCK WAS MORE FROM THE RETAIL PEOPLE THEN THE LEARNED INSTITUTIONS WHICH CANNOT BE TRUE.
18. Ash  Apr 9, 2015 08:48 I Like It. | Report Abuse Reply
Guys! The Indicative price shown in BSE/NSE is the weighted avg price and the cut-off can be very different. If majority of bids were at the lower/higher band then the Avg (indicative) price will be higher/lower. What matters is the Consolidated Volume/demand. In REC case approx .9 crore shares were for retail and the consolidated bids figure (as I had seen at 3:25pm yesterday) were pointing to 333-334 price range and that''''s what has happened. So I don''''t buy the argument that OFS is not transparent.
Now, whether someone buys or not irrespective of it''''s via IPO/FPO/OFS or secondary market is individual''''s investment/trading strategy and decision. One will never know at start whether it''''s right/wrong. Only time will tell.
17. Mr. Gupta  Apr 9, 2015 08:23 I Like It. | Report Abuse Reply
HNIs and arbitrage players crowded out small investors in the retail category. Had hopes that the BJP govt will leave some on the plate for the small investors. OFS institutional book build and price discovery should happen one day before the retail offer, like in developed countries. Price discovery is a farce becaof games played in futures market, arbitrage players, state insurance companies and the like.
16. Naresh agrawal  Apr 9, 2015 07:54 I Like It. | Report Abuse Reply
PLEASE PROVIDE ALL THAT ADDRESS WHERE WE CAN COMPLIENT FOR REC ISSUE FOR RETAILERS . WE ALL NET USER CAN GIVE COMPLIENT TO ALL ADDRESS WHICH ONE WE CAN GET FROM HERE.

15. v.k malhotra  Apr 9, 2015 06:27 I Like It. | Report Abuse Reply
SEBI has already moved for cut off price for retail shareholders in FPO also which may take sometime.but in REC case it will not BE APPLICABLE.and general perception that retail shareholders are not going to get any allotment is true as most of the retail category would have applied close to 315 only.there was no idea of keeping a watch for whole of day and applying at such a high rate afterwards.The whole discount will vanish in this way.
14. PRAKASHKUNDUR  Apr 8, 2015 23:46 I Like It. | Report Abuse Reply
Allotment Price
Symbol      Retail Category       Non-Retail Category
RECLTD      333.30       327.25

Anyone who has bid at a lower price than Rs 333.30 will not get any allotment.
Very difficult for retail investor to bid as indicative price and allotment price is hugely different.
Unless there is an option for bidding at CUT OFF, retailers will lose out
13. dd  Apr 8, 2015 19:30 I Like It. | Report Abuse Reply
The OFS route is not at all Transperent for Retail investor. Inverstor keep on guessing if one will get allotment.
12. Sunny  Apr 8, 2015 19:25 I Like It. | Report Abuse Reply
as per NSE, indicative price = 325.10 for Retail and 324.73 for General. Retail subscribed 9.02 times and General subscribed 4.66 times. I applied at price 315 will I get it or not ?

11. PCJAIN  Apr 8, 2015 18:57 I Like It. | Report Abuse Reply
Cut off price for Retail & Non Retail will be different or same. If its different how there is a discount of 5% as compared to Non retail.
In the last 5 minutes in retail the bids came like storm, How in retail category the bids were bidded so fast. SEBI & Stock exchange have to check this to the retail investor.
I think some brokers have uploaded the bid in bulk. In OFS broker should not be allowed to bid in bulk bids.
10. hardyesh gehlot  Apr 8, 2015 18:48 I Like It. | Report Abuse Reply
OFS IS REAL DANGEROUS GAME FOR RETAIL INVESTORS.IT WAS SURPRISING TO SEE THE DEMAND FOR REC STOCK. IT SEEMED AS IF RETAIL INVESTORS WERE THROWING AWAY ALL SAFETY AND PRECAUTIONS AND WANTED TO GET HOLD OF REC SHARESE AT WHATEVER PRICE. THIS CANNOT BE POSSIBLE WITHOUT BROOKERS PLAYING ACTIVE ROLE IN JACKING UP THE PRICE THROUGH THERE ADVISES FOR THEY HAVE NOTHING TO LOOSE AS THERE BROKERAGE IS GURANTEED WHEN THE RETAIL SELL THEIR SHARES.ALSO RETAIL CAN EASILY GET CARRIED AWAY IN THE EUPHORIA SO CREATED.FPO IS A MUCH BETTER WAY TO REWARD THE RETAIL PEOPLE IF THE GOVT. REALLY INTENDS TO DO SO AND THE PROCESS IS ALSO MUCH TRANSPARENT AND EASY TO HANDLE. MOST RETAIL CANNOT AFFORD TO SIT IN FRONT OF THE TRADING SCREEN FULL DAY AND AT THE END FIND THAT THERE BID WAS NOT ACCEPTED EVEN AFTER CONSTANT REVISION OF PRICE. ALSO NOTE THAT THE DISCOUNT OFFERED TO RETAIL VANISHED FULLY COMPERED TO THE FLOOR PRICE. SHOULD NOT THE GOVT, THE SEBI AND OTHER INSTITUTIONS CONSIDER ALL THIS.
9. R A PRASAD  Apr 8, 2015 16:27 I Like It. | Report Abuse Reply
Retail portion oversubscribed 8 times.
8. pp  Apr 8, 2015 15:52 I Like It. | Report Abuse Reply
someone says, Retail portion is 4 times oversubscribed? Any news??
7. pp  Apr 8, 2015 15:50 I Like It. | Report Abuse Reply
how many times and what price is Retail portion subscribed? Any body has any clue???
6. ANSWER  Apr 8, 2015 13:38 I Like It. | Report Abuse Reply
GREY MARKET RATE FOR REC RS 26 NOW AND ITS FLUCTUATING EVERY SECOND. :-)
5. Girish  Apr 8, 2015 11:47 I Like It. | Report Abuse Reply
at which price one should apply to get allocation?
4. FINNBZZ  Apr 8, 2015 10:50 I Like It. | Report Abuse Reply
ANY GREY MARKET RATE FOR REC?
3. prit  Apr 8, 2015 09:47 I Like It. | Report Abuse Reply
how many share retail investor can apply?
2. Monika  Apr 8, 2015 07:02 I Like It. | Report Abuse Reply
Dear, What does price-priority system mean? At what price should retail investors bid to get allotment? Is there a cut-off price bidding facility like in IPO?
1. Jitu shah  Apr 8, 2015 06:47 I Like It. | Report Abuse Reply
Good opportunity to retail investor