The government will first sell 2.52% of Cochin Shipyard’s paid-up equity as the base offer. It has also kept an additional 2.52% stake as a green-shoe option, which can be exercised if the issue receives strong demand. This means the total stake sale can go up to 5.04%.
An offer for sale is a route through which promoters, including the government, can sell shares in a listed company through the stock exchange mechanism. In this case, the government is looking to reduce part of its holding in Cochin Shipyard while allowing institutional and retail investors to buy shares through the OFS window.
The floor price of Rs 1,400 per share is the minimum price at which investors can bid. The final allotment will depend on demand, bids received and the clearing price under the OFS process.
Cochin Shipyard is one of India’s leading public sector shipbuilding and ship repair companies. The stock has been in focus over the past year due to strong investor interest in defence and shipbuilding companies. The broader sector has benefited from rising government spending on defence manufacturing, naval modernisation and Make in India-linked orders.
The OFS comes at a time when public sector defence and shipbuilding stocks have seen strong market interest. Investors will watch the discount or premium of the floor price compared with the market price, as that usually drives demand in such issues.For non-retail investors, the bidding will take place first. Retail investors will get their separate window the next day. In many OFS issues, retail investors are also sometimes offered a discount, though the current announcement only mentions the floor price and the offer structure.The green-shoe option gives the government flexibility to sell a higher stake if demand is strong. If the OFS is fully subscribed along with the green-shoe portion, the government’s stake in Cochin Shipyard will come down by 5.04%.
The stake sale will also help the government move ahead with its disinvestment programme for FY27. While the offer does not involve any fresh issue of shares by Cochin Shipyard, it will increase the public float in the company if fully subscribed.
The market’s response will depend on the pricing, recent movement in the stock and investor appetite for defence-linked public sector companies. Given the strong rally in several PSU defence names, the Cochin Shipyard OFS is likely to be closely tracked by both institutional and retail investors.
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