Analysts have projected total divestments for FY21 at around Rs 40,000-70,000 crore against the ambitious goal of Rs 2.1 lakh crore target set for the financial year.
Nirmal Bang Institutional Equities said disinvestment is likely to receive a renewed push in FY22. It has projected divestment revenues target of Rs 1.75 lakh crore for FY22 on the back of a buoyant equity market.
“It would be a tad lower than the original Rs 2.1 lakh crore divestment target set for FY21. Despite best efforts, we believe legal and procedural delays could potentially delay some of the big ticket divestments,” it said.
Philips Capital expects disinvestments worth Rs 40,000 crore in FY21 compared with the Budget target of Rs 2,10,000 crore. It is optimistic on strategic disinvestments in FY22, pegging them at Rs 1,20,000 crore. “The divestments may see possible upside risk, if the LIC IPO is executed,” it said.
Ruskmik Oza of Kotak Securities expects the government to announce a divestment target of Rs 1.80 lakh crore. He pegs this year’s divestment at Rs 70,000 crore.
“Due to the pandemic, the strategic divestment drive got delayed, as the entire effort got shifted to Covid fighting. Valuations were pathetic and the government might have wanted right valuations as well. For example, OMCs till this date are still trading at single-digit PE multiples,” he said.
Oza said even if the BPCL strategic divestment sails through, it will set the process and entire mechanics in place. The government would be more aggressive then, and subsequent strategic divestment will be much easier, he said.
Edelweiss said Finance Minister Sitharaman in her Atma Nirbhar packages announced plans of privatisation, delineating different approaches to ‘strategic’ and ‘non-strategic’ sectors, creating an expectation of higher disinvestment projections for FY22.
“Disinvestments have been a separate story altogether. It is worth noting that FY21 Budget also pegged in separate Rs 90,000 crore for stake sale of 10 per cent in LIC and its residual stake in IDBI Bank. While Air India and BPCL are top candidates, the materialisation of the deal has been too slow for too long now. We wipe off any chances for FY21, but project a higher number for FY22 on expectations of clearing of the backlog,” it said.
Philips Capital expects disinvestments worth Rs 40,000 crore in FY21. It said it is optimistic on strategic disinvestment in FY22 while estimating divestments at Rs 1,20,000 crore. “The divestments may see possible upside risk, if the LIC IPO is executed,” it said.
