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How Much Will the Government Raise?
Jul 9, 2016

Having a consistent record of failure to meet disinvestment target, the Government has now resorted to Plan B. It has kick started the process to sell the equity investments of Specified Undertaking of the Unit Trust of India (SUUTI) over three years. One must note that there are 51 firms currently held through SUUTI (Specified Undertaking of the Unit Trust of India) holdings.

The Government's target for disinvestment in FY 17 is Rs 565 bn. If one considers SUUTI's key holdings - 11.9% in Axis Bank, 11.2% in ITC and 8.3% in L&T, these alone could meet the entire target at their current values. The Government has invited applications asking merchant bankers to come up with proposal on how to execute this plan. The mode could be offer for sale, block deals, bulk deals or regular sale through stock exchanges.

What this means for investors is that a lot of blue chips, including the likes of Hindustan Unilever, Ambuja Cements, Hero MotoCorp, Tech Mahindra, Tata Steel etc could be on offer. So, finally, the holdings that were lying as it is would be monetized and could help Government meet its target.

However, if one is inclined to buy when the Government sells, we believe one should keep in mind the valuations at which one buys the stocks. To know our view on some of these stocks and their valuations, please refer to the Stock Select service - our large cap recommendation service headed by Tanushree Banerjee.

This Chart Of The Day was published in The 5 Minute WrapUp - Should Fund Houses Know More Than Small Investors?

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