According to newspaper reports, Mahanagar Telephone Nigam Limited (MTNL) has deferred its proposed Global Depository Receipts (GDR) issue in view of the poor market sentiment. The government had proposed to divest 19 million shares in the company via the GDR issue. This would have diluted its holding in MTNL to approximately 51% from the existing 56%.
The delay is likely to come as a jolt to the government's disinvestment plan under which it plans to raise Rs 100 bn this fiscal. Although, the issue has only been deferred, the underlying reasons evoke concern.
The rationale that the market sentiment was not conducive is unacceptable as another government organisation, the Gas Authority of India Limited, successfully placed shares in the GDR market just a couple of days ago. The fact that GDRs issued earlier by the company trade at a 30% discount to issue price seems to be the main reason.
The move may not have significant implications for the company, as the government will continue to hold a significant holding. The government on the other hand will suffer on account of the delay in receipts that would have arisen due to the disinvestment. This is likely to put further pressure on the fiscal position in the coming months.
More Views on News
Sorry! There are no related views on news for this company/sector.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407