Why the govt should not delay its stake sale in SAIL

The government was expected to kickstart its disinvestment programme with a stake sale in the Steel Authority of India in the last week of this month, and according to estimates, it could hope to earn somewhere around Rs 2,000 crore from the five per cent stake sale, a whopping Rs 500 crore rise from the last time it attempted a similar stake sale in 2013.

While the roadshows for Sail’s offer for sale were expected to begin this month but according to a Mint report the stake sale may take place somewhere around August-September, only after the government divests five percent of its stake in ONGC to raise approximately Rs 12,000 crore.

However, there are murmurs of doubt over whether the government should be delaying it. Here’s how Sail has done since its last stake sale in March 2013:

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The chart shows how the Sail’s stock has appreciated since the last year and as of now the shares are 18.5 percent costlier than they were the last time the government decided to offload its stake in the company. The stock’s movement is in keeping with the BSE PSU index, which has seen a similar rise for the same period:

The index and Sail have retreated from the highs they hit last month and as markets cool from the highs they had hit, it begs the question whether the government should sit on the stake sale in the steel major.