Cochin Shipyard's Offer for Sale (OFS) saw 3.52 times subscription from institutional investors on its first day. The government will exercise its full green shoe option, aiming to raise nearly ₹1,800 crore by selling a 5.04% stake. Retail investors and employees can submit their bids for the shares on July 8.
Cochin Shipyard Limited saw significant demand from institutional investors for its Offer for Sale (OFS) on Tuesday, July 7. The issue was oversubscribed 3.52 times, leading the government to activate the full green shoe option. This choice allows the government to sell additional shares beyond the base offering to meet the strong interest from institutional buyers. The total stake being offered is 5.04%, which is expected to bring in approximately ₹1,800 crore.
The institutional portion of the OFS closed with an indicative price of ₹1,401.85 per share, marginally higher than the established floor price of ₹1,400. Following this, the process will open for retail investors and eligible employees on Wednesday, July 8. This sale is a component of the central government’s wider plan to reduce its holding in public sector undertakings to meet annual disinvestment targets.
Impact of the Stake Sale
For investors, this OFS represents a change in the equity structure of the company. Before this sale, the government held a 67.91% stake in the shipbuilding firm. By selling 5.04%, the government’s total ownership will decrease, which increases the company's free float—the number of shares available for public trading. Historically, such government stake sales are conducted to help the state reach its annual revenue goal of ₹80,000 crore from asset sales.
Despite the positive response to the share sale, Cochin Shipyard shares saw a price correction on the Bombay Stock Exchange on Tuesday. The stock closed at ₹1,448.30, down by ₹56.45 or 3.75% compared to the previous day’s close. Investors often watch how a stock reacts during an OFS, as the floor price can sometimes influence market sentiment in the short term.
What Investors Should Monitor
Looking ahead, market participants will track the completion of the retail and employee bidding process on July 8. Beyond the immediate OFS, the long-term performance of Cochin Shipyard remains linked to its order book for shipbuilding and ship repair services, as well as its ability to manage capital spending on infrastructure projects. Investors should also note that this is one of several government divestments in the current fiscal year, following similar moves in other public sector companies like Coal India and IRFC. The success of future government divestments may depend on broader market appetite for public sector stocks and the specific growth prospects of each individual company.