Shares of state-run Coal India Ltd are expected to remain in focus on Friday, May 29, as the government’s Offer for Sale (OFS) opens for retail investors following a strong response from institutional and non-retail participants.
The retail portion of the comes after overwhelming demand in the non-retail segment prompted the government to exercise its greenshoe option and increase the size of the stake sale. The development signals strong investor appetite for the Maharatna PSU despite broader market volatility.
According to the Department of Investment and Public Asset Management (DIPAM), the non-retail portion of the OFS received bids worth nearly ₹19,000 crore, translating into a subscription of 8.14 times the shares reserved for institutional and non-retail investors.
The strong participation encouraged the government to sell an additional 1% stake through the greenshoe option, taking the total offer size to as much as 2% of equity capital.
The clearing price for the non-retail portion has been fixed at ₹447.10 per share. The government had initially launched the OFS with a floor price of ₹412 per share, which represented a discount of nearly 11% compared with Coal India’s closing price of ₹458.15 on Tuesday.
The issue originally involved the sale of more than 12.32 crore shares, equivalent to up to a 2% stake in the company, including the 1% greenshoe option. Following the strong institutional demand, the government confirmed that it would exercise the additional sale option to maximize proceeds from the transaction.
Coal India shares had reacted positively to the development ahead of the retail portion opening. The stock ended 1.2% higher on Wednesday, the last trading session before markets remained closed on May 28 for Bakri Eid.
How to subscribe to the OFS
The OFS is particularly significant for retail investors given Coal India’s large shareholder base. According to the company’s March quarter shareholding pattern, Coal India had approximately 25.33 lakh retail shareholders collectively holding a 3.82% stake in the company.
For retail participants looking to subscribe to the OFS, the process remains similar to previous government stake sales.
Investors need to log in to their accounts and navigate to the corporate actions or OFS section available on their brokerage platforms.
The OFS window displays key details such as the floor price, bid quantity, offer size, and bidding timelines.
Investors should carefully review these details before placing bids. One of the key requirements is that the bid price should be above the applicable cut-off price; bids below the cut-off level are liable to be rejected.
Retail participants must also ensure they have sufficient funds available in their trading accounts. Once bids are submitted, the corresponding amount for accepted bids is blocked until the allotment process is completed.
Under OFS regulations, retail investors are classified as individuals who place bids worth up to ₹2 lakh.
With institutional investors already demonstrating strong interest and the government increasing the offer size through the greenshoe option, market participants will closely watch the response from retail investors when bidding opens today.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.