HUDCO's stock price plummeted by 10% as the government initiated an offer for sale (OFS) of the state-run housing finance company. The shares hit a day low of Rs 81.22, marking a significant drop. The government aims to sell up to a 7% stake in HUDCO through the OFS, as disclosed in a filing with the stock exchange.
The OFS involves selling 3.5% of the company's ownership. If there's strong demand, there's an option to sell another 3.5%. The floor price for the sale is set at Rs 79 per share.
The government owns most of the housing finance company, about 81.81%, and by selling 7% of it, they aim to collect around Rs 1,100 crore.
The sale of 7,00,66,500 shares, along with the oversubscription option to sell up to 7,00,66,500 more shares, brings the total shares (base size + green shoe) to 14,01,33,000. The government plans to inform the stock exchanges of its intention to exercise the oversubscription option by October 18, 2023, after trading hours. This stake sale aims to help the government meet the minimum public shareholding requirement stipulated by SEBI, the capital market regulator.
The minimum public shareholding norms mandate that listed companies maintain a public float of at least 25%.
Looking at the technical side of things, the stock's recent performance was worse than its short-term averages but better than its long-term averages. The stock's 14-day relative strength index (RSI) stood at 44.99, indicating a moderate position. An RSI below 30 is deemed oversold, while a value above 70 is seen as overbought. The company's stock is valued at a price-to-earnings (P/E) ratio of 10.37, with a price-to-book (P/B) value of 1.17.
The stock maintains a one-year beta of 1.33, signaling relatively low volatility.
Over the past six months, the stock has seen a 79% increase, and it has grown by 52% year-to-date (YTD). Meanwhile, the Indian equity markets experienced a downturn, primarily influenced by declines in banking, financial, consumer, and technology stocks.