BHEL Shares Plunge Following Government Stake Sale Announcement
Shares of state-owned engineering giant Bharat Heavy Electricals Ltd (BHEL) witnessed a sharp decline of approximately 6% during early trading hours on Wednesday. This significant drop came immediately after the Indian government announced its decision to launch an Offer for Sale (OFS) to divest a portion of its stake in the public sector undertaking.
Market Reaction and Trading Details
On the National Stock Exchange (NSE), BHEL shares were trading at Rs 260.10 at 11:20 AM, representing a substantial decline of Rs 16 or 5.80% from previous levels. Similarly, on the Bombay Stock Exchange (BSE), the stock price fell by 5.74% to Rs 260.2, shedding Rs 15 in value. The market reaction reflects investor concerns about potential dilution and increased supply of shares in the market.
OFS Structure and Financial Implications
The government has established a floor price of Rs 254 per share for the OFS, which represents an 8% discount compared to Tuesday's closing price of Rs 276.05. The Centre plans to sell up to 5% of its current holding in BHEL through this mechanism, which could potentially raise approximately Rs 4,422 crore if the entire offer is fully subscribed at the floor price.
The stake sale will be conducted in two distinct phases:
- Base Offer: The government will initially offer a 3% stake, comprising more than 10.44 crore shares
- Greenshoe Option: An additional 2% stake, covering over 6.96 crore shares, may be sold if the issue receives oversubscription
In total, the government could potentially divest up to 17.41 crore shares through this OFS. The bidding process has been structured with non-retail investors participating on Wednesday, while retail investors will have their opportunity to bid on Thursday.
Current Government Holding and Disinvestment Context
The Indian government currently maintains a 63.17% stake in BHEL, which could decrease depending on the level of subscription received for the OFS. This transaction represents a significant component of the government's disinvestment strategy for the current financial year. With this stake sale, the Centre's total disinvestment proceeds from public sector undertakings now amount to Rs 8,768 crore for the fiscal year.
Strong Financial Performance Background
The timing of this stake sale is particularly noteworthy given BHEL's impressive financial results for the quarter ended December 2025. The company reported a remarkable net profit of Rs 382 crore, representing a staggering 206% year-on-year increase compared to the Rs 125 crore recorded during the same period in the previous year.
This substantial improvement in profitability was primarily driven by enhanced execution capabilities and improved operating leverage. Revenue from operations demonstrated robust growth, increasing by 16% to reach Rs 8,473 crore from Rs 7,277 crore in the corresponding quarter of the previous year. This revenue growth indicates improved project execution and a strengthened order pipeline.
Total income, which includes other income streams alongside operational revenue, rose to Rs 8,700 crore from Rs 7,393 crore in the year-ago quarter, further underscoring the company's improved financial performance and operational efficiency.
