Investor roadshow in US to draw interest in ONGC, Coal India

New Delhi: Finance ministry officials and top executives of Oil and Natural Gas Corporation (ONGC) and Coal India will hold an investor roadshow in the United States next week to prepare the ground for probable sale of minor stakes in the two firms by the government, people aware of the matter said.

Officials and executives plan to engage with institutional investors during the roadshow and explain to them the rising earnings prospects of the two companies with the changing global business climate, they said.

The current share prices of the two firms do not reflect the true value of their business and an engagement could help investors understand the companies better, executives said.


Shares in Coal India, valued at Rs 1.75 lakh crore, have lost nearly a fifth in three years, mainly due to stagnant demand for coal from power producers. ONGC, with a market cap of Rs 2.13 lakh crore, is down nearly a tenth due to an oil price collapse.

But the two stocks are on recovery path now. A rising oil price has pushed ONGC up 30% since February 2016, when oil prices had touched $28 per barrel. Coal India is up 20% in a year as coal demand has improved. The government now plans to use this opportunity to bring in new investors in these firms.

The Department of Investment and Public Asset Management (DIPAM) secretary Atanu Chakraborty said the roadshow is aimed at strengthening the confidence of investors in these companies but there is no plan as of now to sell government stake in the companies.

But the people cited earlier said that the roadshows are meant to understand investor sentiment and that if investors seem receptive the government could sell 5-10% in the two firms. The government owns 67.5% in ONGC and 78.32% in Coal India, and a sale of 5% each in the two firms could fetch about Rs 20,000 crore at current market valuation, or about a quarter of this year’s divestment target.

The government aims to garner Rs 80,000 crore in divestment proceeds in 2018-19, lower than the Rs one lakh crore it managed in the previous fiscal.

The government has also been toying with the idea of listing one central public sector unit overseas following a suggestion from the Prime Minister recently, according to people privy to the discussions.

The names of ONGC, Coal India and Indian Oil Corporation have been discussed but the government has yet to finalise which company, if any, will get listed overseas. An executive said that ONGC is unlikely to get listed since it does not need capital and will find it hard to meet strict compliance needs of overseas listings. The way the government deals with state firms and gets things done, it will be difficult to comply with overseas market regulations, he said.