BHEL share price tumbles 6% as government announces 5% stake sale via OFS

Bharat Heavy Electrical share price fell over 6 per cent on Wednesday after the government said it would divesting up to 5 per cent shareholding in the company at ₹254 per share.

Bharat Heavy Electricals (BHEL) share price today

 

Bharat Heavy Electricals Limited (BHEL) stock was seen reeling under selling pressure, following a gap-down opening after the company set the floor price for its OFS at a discount.  The stock started trade 5 per cent lower at ₹262 as against the previous day's close of ₹276. The company set a floor price at  ₹254 per share for the Offer for Sale (OFS), which opened for subscription today.

 

As of 10:56 AM, Bharat Heavy Electricals shares traded 5.34 per cent lower at ₹261.35 per share, as compared to a 0.1 per cent advance in the Nifty 50 index. Around 22.8 million shares have changed hands on the NSE so far. The company had a market capitalisation of ₹90,742.6 crore.  

 

 

In the last 12 months, Bharat Heavy Electricals share price has increased by 30.4 per cent, as compared to a 12.5 per cent advance in the Nifty 50 index.   CHECK Stock Market LIVE Updates

 

BHEL OFS details

 

Bharat Heavy Electricals share price fell amid the discount pricing to the offer for sale (OFS), which, opened for subscription on Wednesday. The Government of India is divesting up to 5 per cent stakes in the public-sector company. 

 

The Ministry of Heavy Industries, promoter of Bharat Heavy Electricals, is selling up to 104.4 million shares with a face value of ₹2 or 3 per cent of the total issue and paid-up equity share capital through the offer for sale (OFS). The offer also has a greenshoe option of 69.6 million shares with a face value of ₹2 or 2 per cent of the total issue, according to an exchange filing.    Additionally, 0.25 per cent or 0.87 million shares with a face value of ₹2 of Bharat Heavy Electricals will be offered to the eligible employees of the company. 

The OFS is open for subscription for non-retail investors on Wednesday, while retail investors can participate in it on Thursday, the company said in an exchange filing. 

Analyst view: 

The 6 per cent fall in Bharat Heavy Electricals isn’t because something suddenly went wrong with the business. It’s largely a market reaction to how the OFS is structured, Vikash Yadav, technical research analyst, Kedia Advisory.

 

The government has set the floor price at ₹254, which is about 8 per cent lower than the previous close of ₹276.10. In OFS situations, this floor price naturally becomes the short-term reference point for the market. Institutional investors usually expect a discount to participate, since they’re absorbing a large chunk of supply. So, the stock price often gravitates toward that level even before the OFS closes, he said.  Up to 5 per cent equity (3 per cent base plus 2 per cent green-shoe option) is a sizable supply — roughly ₹4,422 crore worth of shares. Whenever that much stock hits the market at once, it creates temporary pressure. Short-term traders and arbitrage players adjust their positions, which adds to the volatility, Yadav added.

Order win

 

In a separate exchange filing, Bharat Heavy Electricals informed that Bharat Coal Gasification and Chemicals, its joint venture with Coal India, received a Letter of Award (LoA) for an ammonium Nitrate Project at Lakhanpur, Jharsuguda district in Odisha. The total value of the order is ₹2,800 crore, excluding the customs duty. 

 

Bharat Coal Gasification and Chemicals will conclude the order by 42 months from the date of LoA acceptance, while the operations and maintenance will run for 60 months from the preliminary acceptance, according to the exchange filing.