SJVN shares tumble after Indian government announces stake sale

Shares of hydroelectric power generator, SJVN Ltd, experienced a significant drop in early trading on Thursday, falling by 10% following the Indian government's announcement of its plan to divest up to 4.92% stake in the company via an Offer for Sale (OFS). The company's stocks plunged 10.05% to Rs 73.53, a dramatic drop from the previous close of Rs 81.75 on BSE.

This fall is particularly significant as it comes after a record high of Rs 83.69 in the previous session. During Thursday's session, the market capitalization of SJVN slipped to Rs 29,465 crore, with a total of 27 lakh shares being traded, resulting in a turnover of Rs 20.18 crore on BSE. The company's shares have shown high volatility over the past year with a beta value of 1.1.

The government's OFS is set to begin today, offering up to 9,66,72,962 equity shares through a two-day sale. The base price for this offer has been set at Rs 69 per share, representing a 15.59% discount to SJVN's closing price on Wednesday. Non-retail investors can start participating from today, while retail investors can join from Friday onwards.

In case of oversubscription, the company plans to purchase up to an additional 9,66,72,961 shares, which would then represent 4.92% of the company's total issued and paid-up equity share capital.

On the technical front, SJVN's stock has a relative strength index (RSI) of 73.1, indicating that it is currently trading in the overbought zone. Moreover, its shares are trading above their 20-day, 50-day, 100-day, and 200-day moving averages, but below the 5-day moving average.

In the previous session, SJVN's shares reached an all-time high following the signing of a memorandum of understanding with Power Finance Corporation. This agreement was for financial assistance to a diversified portfolio of projects costing approximately Rs 1,18,826 crore. These projects primarily involve renewable energy and thermal generation. The proposed term loan financial assistance is set to cover 70% of the project cost, with a potential increase for renewable energy projects.

SJVN Limited operates in the electricity generation industry, with its tariff set for power generation. The company offers three primary products and services: electricity generation (hydro, wind, and solar), consultancy, and transmission. Its business portfolio includes thermal power, hydro power, wind power, solar power, power transmission, consultancy, and power trading.

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