Sources, however, say that banks and financial institutions are likely to bid for the issue at Rs 200-230 levels, well below the reserve price of Rs 250 the centre has fixed. The Concor scrip was last traded at Rs 404.80 on the National Stock Exchange, while on the Bombay Stock Exchange it closed at Rs 378.

Merchant bankers were predictably tightlipped on pricing. "We cannot say anything now about the price, but most of the banks and institutions are willing to put in money," a source handling the issue said.

Among the institutions that are eager to pick up the issue are IDBI, ICICI, General Insurance Corporation and LIC. Among the banks which have shown interest are State Bank of India, Bank of Baroda and ICICI Bank.

Sources said that State Bank has indicated that it will put in bids between Rs 230 and Rs 240. State Bank sourcessaid that the bank had yet to decide on pricing. "We will defiantly be putting in money into the Concor issue, but only on the last day. The pricing of the bid will be decided only then," a source said.

Merchant banking sources said that most of the bids from institutions and banks will come on only the last day and added that the bulk of the bidding will come from them.

A leading bank which is likely to bid for Concor said that it would bid around Rs 200-210. Sources said that ICICI was also likely to bid at those levels. ICICI will route its bid through ICICI Securities, a wholly-owned subsidiary.

The issue, which opened to investors on Monday, will close on November 13.Warburg Dillon Read, the global co-ordinator for the issue, will be helped by a syndicate that includes DSP Merrill Lynch and Unit Trust of India. The government plans to sell 9 million shares of which four million are new shares. Following the disinvestment, the government's stake in the corporation will fall to 63 per cent from 77per cent.

INSIGHT
A bargain pick

The reserve price of Rs 250 is fairly low by any standard.

Considering that the company enjoys a virtual monopoly in its area of operations and container transport is a relatively low-risk business, the rate of return required from an investment in Concor should ideally be low.

Even if one assumes a required rate of return of 21 per cent and a growth rate of 20 per cent for its dividends (between 1996 and 1998, dividends have actually grown by about 30 per cent), the intrinsic value of Concor's shares works out to Rs 240. The value of the business as a whole, based on the company's earnings, works out to be much more. Though during the last four years, Concor's EPS has grown by over 70 per cent per annum, let us assume a conservative future growth of 20 per cent per annum. As the company's long-term debts are negligible, a cost of capital of 25 per cent should be a realistic figure. For the year 1997-98, EPS stood at Rs 17.50. Based on these figures,the value of the business works out to be Rs 420 per share.

Therefore, there appears to be little reason for banks and FIs to bid lower than the reserve price.