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| Sunday, 28 November 2004 |
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LIOC shares in the market on Monday by Elmo Leonard The Lanka IOC initial public offer which opens tomorrow is one of the best IPO's on offer in recent months, analysts said. LIOC is scheduled to close on 16 December and earliest at the end of its opening day, while some stock brokers said that it could be oversubscribed three-fold. There is considerable foreign interest for this IPO, stockbrokers said. LIOC offers 100 million shares with a green shoe option available to increase the offering to 133.33 million shares in the event of an over-subscription. The price will be decided using a "book building" exercise, in a range between SLR 23-27. Stockbrokers anticipate the price to be Rs 27 per share. With oversubscription anticipated, when the stocks come into trading on December 31, it is widely accepted that prices would go up. Namal's CEO S Jeyavarman said that the stock is good in the long term. "Indian Oil Corporation is well managed and has a history of paying handsome dividends," Jayavaman said. He also thinks that the stock is good for institutional investors. LIOC has a Fortune Global 500 parent. The company's impact can be gauged on profits of Rs 578 million in its first full year of operations and Rs 859 million (currently Rs 104 to a US dollar) in the first four months of financial year 04/05, LIOC's Senior Vice President, S Srinivasan said. IOC accounts for 51 percent of the market in petroleum products, 42 parent of national refining capacity and 67 percent of the downstream pipeline throughput capacity in India. The IndianOil group of companies also owns and operates 10 of India's 18 refineries with a capacity of one million barrels per day. It has six subsidiaries within India and two overseas, the first in Mauritius, established to build infrastructure and enter the downstream petroleum business, the other LIOC, to penetrate the Sri Lankan market. The IPO proceeds will be utilised to refurbish existing and newly acquired retail outlets from 170 to 270, refurbish existing outlets, update storage tanks in Trincomalee and set up a blending plant for lubricants in Trincomalee at a cost of Rs 500 million. Answering questions, LIOC's managing director said that in the event of trouble breaking out in Trincomalee they could supply oil from other destinations. LIOC is expected to enter other high-margin segments of the petroleum sector such as LP gas bunkering and aviation fuel. IndianOil is one of the world's largest marketers of LPG with over 400 million customers for its Indane brand. |
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