Hudco Share Price Drops 9% Overnight, What The Government Is Up To?
The Indian government has decided to sell some of its shares in Hudco. As you know, HUDCO is a housing finance company. The goverment wants to sell up to 7% of its stake in the business. Because of this news, the HUDCO share price fell by 9%, to Rs 81.8 each.
The government is using the method called an “Offer for Sale” or OFS. First, they’ll offer 3.5% of the shares. If people want to buy more, the government has an option to sell another 3.5%.
Who can buy these shares? Well, today only big investors, like institutions, can bid. Regular investors and traders can get a chance to buy these shares tomorrow. The base price for each share is Rs 79, which is actually lower than its recent closing price of Rs 89.9. So, it’s like a discount!
The government currently own 81.81% of Hudco. But rules say that at least 25% of a listed company should be owned by the public. By selling these shares, they can meet that rule and also make about Rs 1,100 crore.
What about Hudco’s workers? They can also buy shares, but only up to Rs 5,00,000 worth. This way, the employees get a piece of the action too.
The company made more money this year compared to last year. But it’s important to note that the profit dropped when compared to the last three months. The HUDCO share price has dropped because of this, and if you’re interested, you can buy some shares soon.
Alright, let’s talk about why the government might be selling Hudco shares. One reason is to follow the rules. As I said, at least 25% of a listed company’s shares must be owned by the public. Right now, the government owns too much, so they’re selling some. Another reason could be money. The government could make around Rs 1,100 crore from this sale. This cash can help in other national level projects.
Now, what’s the impact on the market? First, Hudco’s share price dropped, but that might be temporary. If the company performs well, the price may bounce back. Second, it might affect investor mood. If people see the government selling, they may think it’s a good time to sell too. This can make the market a bit shaky. In short, the government is balancing rules and making money, but the market could see some ups and downs, so invest wisely!