The government has kick-started the disinvestment programme for this fiscal by selling a 5% stake in the Steel Authority of India Ltd (SAIL) on Friday through the Offer For Sale (OFS) route. The OFS is open for bidding for retail investors. But should you invest in it as a retail investor at a time when the overall demand for steel is subdued, globally and domestically?

According to Karvy's view, “The government has kick started the disinvestment programme by offer for sale in SAIL. The OFS is for 5% stake in the company and the floor price is fixed at Rs.83 per share.  Thus, total amount the government would gather just little over Rs.1700 crore. The retail investor who can apply up to Rs 200,000 per application will be getting a benefit of 5% discount to the cut off price. We see the price of the stock is reasonable price at around Rs 83, also with arbitragers taking counter position in futures indicates the cut-off price likely between Rs.83-84. Thus, we recommend bidding the offer below Rs 84. Also, investors looking for medium to long term perspective can also apply for the issue for 15-20% upside in the stock in the coming 9-12 months perspective.”