Brokerages hopeful of govt meeting FY19 disinvestment target

Brokerages Kotak Institutional Equities and Edelweiss Financial Services expect government to meet and even exceed disinvestment target with multiple disinvestment projects in the pipeline.

Government has garnered Rs 35,134.76 crore or 43.92 per cent of the divestment target of Rs 80,000 crore for FY 18-19 so far and meeting a shortfall of around Rs 45,000 crore looks an uphill task by March 31, 2019, as of now.

“Follow-on offering of Bharat-22 ETF for Rs 10,000 crore, sale of SJVN to NTPC for Rs 7,000 crore, further buybacks of around Rs 12,000 crore and pending sale of Dredging Corporation of India, further IPOs of PSUs such as Mazagaon Docks, RVNL and others - further inflows amounting to around Rs 30,000-35,000 crore can easily be raked in by the government in order to meet or even exceed the FY19 target,” said Edelweiss Financial Services in its interim Budget preview.

“The present NDA government has done most of the disinvestment through four vehicles throughout their term- through sale of ETFs (Bharat-22 & CPSE), Public offering of PSUs, Buybacks, sale of one PSU to another PSU, Block Deals and sale of shares to employees.”

According to Edelweiss, “Given a budgeted disinvestment target of Rs 80,000 crore in FY19, proceeds amounting to around Rs 49,000 crore or 61.25 of Budget Estimate have already flown in till date.”

Sahil Kapoor, chief market strategist Edelweiss Financial Services said, “ Government will be getting around Rs 15,000 crore from REC-PFC deal, another Rs 6,500 crore from buybacks, smaller IPOs and stake sale from SUUTI assets will meet the shortfall.”

 Kotak Institutional Equities in its interim Budget preview said, “While the government has garnered Rs 33,800 crore till December 1, 2018, the REC, BHEL, and NHPC transactions along with expected SUUTI sales should ensure meeting of the target of Rs 80,000 crore for FY2019.”

“We note that the government has sufficient options to raise large amounts from

divestments of its stakes in government and private companies. We expect the

government to keep its divestment target at Rs 80,000 crore in FY2020E,” Kotak Institutional Equities.