Cochin Shipyard Shares Recover From 4% Morning Drop, Still Down 2% As Government Opens 5% OFS

Shares of Cochin Shipyard Ltd. recovered from an intraday decline of more than 4% but continued to trade around 2% lower on Tuesday after the government launched an offer for sale (OFS) to divest up to a 5.04% stake in the state-owned shipbuilder.

The stock slipped as much as 4.4% to ₹1,438 in morning trade after the Department of Investment and Public Asset Management (DIPAM) announced the stake sale after market hours on Monday. The shares later pared some of the losses but remained in the red as investors evaluated the discounted share sale.

"The government announces Offer for Sale in Cochin Shipyard Ltd. (CSL) with a base offer of 2.52% of its paid-up equity and an additional 2.52% as the green-shoe option in case of oversubscription," DIPAM Secretary Arunish Chawla said in a post on X.

The OFS opened for non-retail investors on July 7, while retail investors can bid on July 8.

The government has fixed the floor price at ₹1,400 per share, representing a discount of around 7% to Monday's closing price of ₹1,504.75. The Centre currently holds 67.91% of Cochin Shipyard.

If the government exercises the green-shoe option in full, it will sell up to 5.04% of the company's equity through the OFS. At the floor price, the transaction is expected to fetch around ₹1,800 crore for the exchequer.

The Cochin Shipyard stake sale marks the government's seventh disinvestment through the OFS route in the current financial year. So far, the Centre has pared stakes in Central Bank of India, Coal India, NHPC, NLC India, General Insurance Corporation (GIC) and Indian Railway Finance Corporation (IRFC), raising a cumulative ₹18,561 crore.

For the current financial year, the government has budgeted to raise ₹80,000 crore through disinvestment and asset monetisation, with stake sales in listed public sector enterprises expected to contribute a significant portion of the target.

An OFS enables an existing shareholder to sell shares through the stock exchange without the company issuing fresh equity. Since no new shares are created, the proceeds from the transaction accrue to the selling shareholder in this case, the Government of India rather than to the company.

Established in 1972, Cochin Shipyard is a Miniratna public sector undertaking under the Ministry of Ports, Shipping and Waterways. The Kochi-headquartered company is engaged in shipbuilding and ship repair for commercial and defence sectors and has executed several strategic naval projects, including the construction of India's first indigenous aircraft carrier, INS Vikrant.

The market will now watch the subscription levels for the two-day OFS, with institutional participation on Tuesday followed by retail bidding on Wednesday expected to provide an indication of investor appetite for the government's latest PSU stake sale.

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