Coal India Shares Drop After Government Announces ₹5,000 Crore OFS

Coal India shares declined nearly 4% in early trade on May 28 after the Government of India initiated an offer for sale (OFS) to divest up to a 2% stake in the state-owned coal producer.

The stock fell as much as 3.86% to ₹440.45 on the NSE during morning trade, compared with the previous close of ₹458.25 on the BSE. The decline came after the Department of Investment and Public Asset Management (DIPAM) announced the stake sale late Tuesday.

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According to the official announcement, the OFS consists of a base issue of 1% equity and an additional 1% green shoe option that may be exercised in the event of strong investor demand. The floor price for the sale has been fixed at ₹412 per share, representing a discount of nearly 10% to Coal India’s previous closing price.

OFS Opens In Two Phases

The OFS opened for non-retail investors on May 28, while retail investors will be allowed to place bids on May 29. The government plans to offload nearly 12.32 crore shares through the transaction.

DIPAM Secretary Arunish Chawla, in a post on X, said the government had launched the OFS with a base offer of 1% equity along with an additional 1% green shoe option in case of oversubscription.

Based on the floor price, the stake sale is expected to generate close to ₹5,000 crore for the exchequer.

Discounted Pricing Weighs On Stock

The pricing of the OFS below the prevailing market value triggered selling pressure in Coal India shares during the opening session. Offer-for-sale transactions in public sector companies typically attract investor attention due to discounted pricing and increased supply of shares in the secondary market.

Coal India had ended Tuesday’s session marginally higher, gaining 0.25% before the OFS announcement was made public.

The company remains one of the government’s key dividend-paying public sector enterprises. Coal India has continued to report stable production volumes and cash flows, supported by steady domestic coal demand.

Disinvestment Push Continues

The Coal India OFS marks the second major public sector stake sale undertaken by the government in the current financial year. Earlier in May, the Centre divested an 8.08% stake in Central Bank of India through a similar route, mobilising ₹2,266 crore.

The Union Budget for FY27 has set a disinvestment and asset monetisation target of ₹80,000 crore. This is significantly higher than the revised estimate of ₹33,837 crore achieved in FY26.

The government has been using the OFS mechanism regularly to raise resources while maintaining majority ownership in strategic public sector companies. The divestment of Coal India is taking place in the midst of overall caution prevailing in the market owing to rising commodity prices around the world.