* Received bids for 1.7 times the shares on offer
* Bids at weighted average price of 145.91 rupees
* Foreign investors bid for more than half the shares - sources (Updates bid data, adds comments)
By Prashant Mehra
MUMBAI, Feb 7 (Reuters) - India has raised $2.15 billion by selling shares in state-run power utility NTPC, putting the government on track to meet its fundraising target to reduce the budget deficit.
Selling stakes in state companies is a key element of the government's plan to reduce the deficit to 5.3 percent of gross domestic product by the end of March, from 5.8 percent in 2011/12, to avoid a credit downgrade from global ratings agencies.
The single-day NTPC share auction was 1.7 times oversubscribed, with bids at a weighted average price of 145.91 rupees ($2.74) against the government's minimum offer price of 145 rupees, stock exchange data showed.
The government was selling a 9.5 percent stake, 783.26 million shares, reducing its own stake to 75 percent.
"We are quite satisfied with the response. If the last few issues are any indication, there is sufficient appetite in the market," Ravi Mathur, the government official in charge of divestments, told reporters in New Delhi.
The NTPC auction followed sales of Oil India Ltd last week and miner NMDC in December, raising $585 million and $1.1 billion respectively.
New Delhi aims to raise a total of $5.1 billion through stake sales by March 31. The government has raised nearly $4 billion so far and is planning to sell shares in at least four more state companies by the end of March.
"We think they will get pretty close to their target. The process (and) the pricing seems to have been thought through well," said Saurabh Mukherjea, head of equities at Ambit Capital.
Foreign institutional investors bid for more than half the NTPC shares on offer, two sources involved with the deal said. State investors also sought a significant chunk of the shares, one of the sources said.
Analysts had expected the offer to generate strong demand, given the relatively attractive valuations to peers and strong growth prospects in a country facing rising demand for power from industry, homes and shopping malls.
NTPC is India's largest power generation company and accounts for a fifth of the total generation capacity in Asia's third-largest economy. It aims to more than treble capacity by 2032.
Only five of the 42 analysts covering NTPC have a 'sell' recommendation on the stock, according to Thomson Reuters Starmine data.
Shares in the company closed 2.5 percent lower at 148.05 rupees, but still at a premium to the indicative offer price. The stock has declined about 5 percent so far in 2013, compared with a 0.8 percent gain in the main stock index. ($1 = 53.23 Indian rupees)
(Editing David Goodman)