MMTC OFS commences at Rs 60/share; stock tanks 10%

NEW DELHI: MMTC Ltd slipped 10 per cent in morning trade on Thursday as the company launched its one-day offer-for-sale (OFS) at a floor price of Rs 60 or 72 per cent discount to its closing price of Rs 211.45 on June 12.

The government will kick start its divestment programme for this fiscal with a 9.33 per cent stake sale in MMTC, which may fetch it around Rs 600 crore.

At 09:20 a.m.; MMTC was locked in lower circuit at Rs 190.35, down 10 per cent. The stock hit another fresh 52-week low of Rs 190.35 in trade today on the BSE.

On the NSE, the stock hits fresh 52-week low of Rs 189.05.

In the 2012-13 fiscal, MMTC posted a loss of Rs 70.62 crore, due to 57% dip in revenues during the period as compared to the previous fiscal.

The company reported a profit of Rs 70.72 crore in 2011-12.

Most brokerages recommend investors to avoid the OFS in which government holds 86.36 per cent stake dues to expensive valuations.

MMTC is a trading company with a 'Five Star Export House' status. However, at the current price, the stock is trading at a very expensive valuation of 398x FY2012 PE due to low free float or 0.67 per cent of its market cap.

“Even at a floor OFS price of Rs 60, it is trading at FY2012 PE of 113x, which is very expensive in our view,” Angel Broking said in a report.

The brokerage firm recommends investors to ‘AVOID’ subscribing to MMTC OFS.