Bharat Heavy Drops Most in 30 Months on Stake Sale, Stock Split

Bharat Heavy Electricals Ltd. (BHEL), India’s biggest power equipment maker, fell the most in 30 months in Mumbai after recommending the sale of a 5 percent stake held by the government and approving a stock split.

Bharat Heavy declined 7 percent to 1,931.75 rupees at the close, the most since Nov. 11, 2008, valuing the company at $21 billion. The stock has fallen 17 percent this year compared with a 12 percent drop in the benchmark Sensitive Index. A stake sale at the current price would fetch $1.1 billion.

“Bharat Heavy’s follow-on public offer is likely to be priced at a discount to the current market to attract strong investor interest and build appetite for a large-sized issue,” said Sunil Pachisia, vice president with Pratibhuti Viniyog Ltd. “The correction is in anticipation of the discount sale.”

Prime Minister Manmohan Singh plans to raise 400 billion rupees ($8.8 billion) from asset sales in the year that started April 1. The government has approved share sales in companies including Oil & Natural Gas Corp., India’s biggest energy exploration company, Steel Authority of India Ltd. and Hindustan Copper Ltd.

The stake sale is subject to government approval, state- owned Bharat Heavy said in a statement today to the Bombay Stock Exchange. The board approved splitting each share into five.

Power Finance Corp., India’s largest lender to utilities, raised the maximum 45.8 billion rupees sought in a share sale this month, the first by a state-run company this year. Indian companies have raised 244 billion rupees in local share sales this year, about half the amount sold in the same period in 2010, according to data compiled by Bloomberg.

The government held a 68 percent stake in Bharat Heavy as of March 31, according to data compiled by Bloomberg.

To contact the reporter on this story: Kartikay Mehrotra in New Delhi at kmehrotra2@bloomberg.net

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net

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