The offer for sale issue (OFS) from SAIL would be held today for 24,03,96,572 shares or 5.82% of the equity of the company. The floor price has been fixed at Rs 63 against the closing price of Rs 63.90 on the BSE and NSE. The discount on the basis of the closing price is Rs 0.90 or 1.43%, leaving little or no room for any further fall for any investor. In such a scenario there would be virtually no interest from investors and one more issue would have to be bailed out by the PSU banks and LIC. It’s unfortunate that this kind of bailout is being resorted to in almost every single issue in which an OFS is being made by the government.

Coming to the price movement of SAIL in the markets today, the share lost Rs 1.15 or 1.77% on the BSE to close at Rs 63.90. The low for the day was Rs 63.55 which also happens to be a new 52 week low made today. On the NSE the low was Rs 63.50, and the day’s loss was Rs 1.25 or 1.92%. The closing on the NSE was also the same as BSE at Rs 63.90.The stock price in the first week of January 2013 was close to the 52 week high and was at Rs 101.50 while the 52 week high in April 2012 was marginally higher at Rs 101.75. The kind of destruction seen by the share is reminiscent of what is happening in midcap and smallcap stocks.

The market cap at the closing price is Rs 26,394 crs and at the floor price the OFS would raise Rs 1,515 crs. With no investor interest likely it appears imminent that post the bail out one would see a selling pressure from the PSU banks similar to what was seen in Hindustan Copper. It makes sense that investors stay away from this counter and allow the price to fall to around Rs 55 before making any purchases.