Coal India Shares Tumble 6% After Centre Launches 2% Stake Sale Via OFS at Steep Discount 

Mumbai, May 27:Shares of Coal India declined sharply on Wednesday after the Centre announced the sale of up to a 2% stake in the state-run miner through an offer for sale (OFS) at a significant discount to the previous closing price.

Coal India share price fell nearly 6% in early trade, emerging among the top losers on the benchmark indices, as investors reacted to the discounted floor price and concerns over increased supply of shares in the market.

The government has fixed the OFS floor price at ₹412 per share, representing a discount of nearly 10% to Coal India’s previous closing price. The issue includes a base offer of 1% equity, with an option to additionally sell another 1% stake depending on investor demand.

As of writing, the stock was down 2.2% at Rs 449.6.

Discounted Pricing Weighs on Sentiment

Analysts said the sharp discount attached to the OFS weighed heavily on near-term investor sentiment.

Coal India pared losses as trade progressed. Source: NSE

Stake sales through OFS routes typically pressure PSU stocks in the short term because of the temporary supply overhang they create. Investors often turn cautious as the discounted pricing narrows immediate upside potential in the secondary market.

Coal India shares had witnessed a strong run-up in recent months supported by healthy dividend expectations, stable coal demand and improved sentiment toward public sector enterprises. Wednesday’s decline, however, reflected profit booking as traders adjusted positions ahead of the stake sale.

Some analysts also pointed out that the pricing may encourage institutional participation in the OFS despite the temporary weakness in the stock.

Government Looks to Raise Funds

The stake sale forms part of the government’s broader divestment and asset monetisation strategy for the financial year.

Coal India had witnessed a strong run-up in recent months supported by healthy dividend expectations, stable coal demand and improved sentiment toward public sector enterprises. Source: NSE

The Centre currently holds over 63% stake in Coal India and is expected to raise roughly ₹5,000 crore through the transaction if the additional greenshoe option is fully exercised.

Coal India remains one of the government’s most profitable state-run enterprises and continues to play a critical role in India’s energy ecosystem. The company contributes significantly to domestic coal production and remains a key supplier to the power sector.

Broader PSU Space in Focus

The sharp move in Coal India also put the broader PSU segment under focus during Wednesday’s session, especially as investors assess the possibility of additional government stake sales in other state-run companies.

Market participants said sentiment toward PSU counters has remained mixed in recent weeks, with investors balancing attractive valuations and dividend yields against concerns over periodic divestment-driven supply pressure.

Despite the decline, some brokerages continue to remain constructive on Coal India from a long-term perspective, citing robust cash flows, healthy dividend payouts and strong domestic coal demand.

Investors will now closely watch the response to the OFS from institutional and retail buyers, which could determine the stock’s near-term direction once the offering concludes.

Source:

• https://www.nseindia.com/get-quote/equity/COALINDIA/Coal-India-Limited