Shares of Coal India declined nearly 5% on Wednesday, May 27, after the Government of India launched an Offer for Sale (OFS) in the state-run coal mining giant at a steep discount to the prevailing market price.
Coal India shares fell as much as 4.8% during the session to around Rs 436 after the government fixed the OFS floor price at Rs 412 per share. The floor price represents a discount of nearly 10.1% compared to Coal India’s previous closing price of Rs 458.15 on the NSE.
The government, through the Ministry of Coal, plans to sell up to 6.16 crore equity shares under the base offer, representing 1% of Coal India’s outstanding paid-up equity capital. At the floor price, the base issue size is estimated at around Rs 2,539 crore.
The OFS also includes a greenshoe or oversubscription option, allowing the government to sell an additional 6.16 crore shares. If fully exercised, the total offer size could rise to nearly Rs 5,078 crore, equivalent to around 2% of Coal India’s equity capital.
Markets generally react negatively to discounted OFS announcements as the lower floor price often creates near-term pressure on the stock price. Investors also factor in the possibility of increased supply of shares entering the market during the offer period.
Additionally, up to 25,000 equity shares may be reserved for eligible employees as part of the OFS framework.
Coal India remains one of India’s largest PSU companies with a market capitalisation of around Rs 2.69 lakh crore. The stock has also been among the most actively traded counters during Wednesday’s session following the OFS announcement.
Despite the sharp decline, investors will continue to monitor subscription demand, institutional participation, and future government divestment plans for further direction in the stock.
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