Coal India share price witnessed a sharp decline of over 6% on Wednesday, May 27, as the government's two-day offer for sale (OFS) opened for non-retail investors. The stock opened lower and continued to trade in the red amid heavy selling pressure. The OFS, which is part of the government's disinvestment plan, has a floor price of Rs 450 per share.
OFS Details and Floor Price
The government is selling a 5% stake in Coal India through the OFS, with an option to retain oversubscription. The floor price has been set at Rs 450 per share, which is a discount of about 6% to the previous closing price of Rs 479. The OFS is open for non-retail investors on May 27 and for retail investors on May 28. Retail investors are those who invest up to Rs 2 lakh in the issue.
Impact on Share Price
Following the announcement, Coal India shares fell over 6% to hit a low of Rs 449.90 on the BSE. The stock has been under pressure due to the large supply of shares hitting the market. However, some analysts believe that the floor price offers a good entry point for long-term investors.
The government aims to raise around Rs 7,000 crore through this OFS. The proceeds will be used to meet the disinvestment target for the current fiscal year. Coal India is a state-owned coal mining company and is one of the largest coal producers in the world.
Market Reaction
The broader market also witnessed selling pressure, with the BSE Sensex and Nifty 50 indices trading lower. However, the decline in Coal India was more pronounced due to the OFS. Traders and investors are advised to stay cautious and consider the floor price before making any investment decisions.
In the past one year, Coal India shares have given a return of around 30%, outperforming the broader market. However, the stock has been volatile in the short term due to various factors including global coal prices and government policies.
Investors who are interested in participating in the OFS can bid for shares at the floor price or above. The final allotment will be based on the bidding pattern and the number of shares on offer. The OFS is expected to be subscribed well given the discount offered.
