Cochin Shipyard falls 5% as govt launches OFS; should you participate?

Cochin Shipyard OFS: The government has announced to sell up to 5 per cent stake in Cochin Shipyard at a floor price of ₹1,400 per share through an offer for sale beginning Tuesday.

Cochin Shipyard OFS: Cochin Shipyard shares today fell as much as 5 per cent in trade on Tuesday as the Centre launched an offer for sale (OFS) to divest up to a 5.04 per cent stake in he PSU. The stock opened with a loss of 4 per cent at ₹1,451.20 and touched a low of ₹1,437.50 in morning deals.

 

As of 9:40 AM, Cochin Shipyard shares were down 4.2 per cent at ₹1,443 with 1.3 million equities changing hands.

 

In comparison, the Nifty 50 index traded 0.12 per cent higher.

 

Cochin Shipyard OFS price 

 

Earlier on Tuesday, the government announced that it will sell up to 5 per cent stake in Cochin Shipyard at a floor price of ₹1,400 per share through an offer for sale beginning Tuesday.

 

 

Cochin Shipyard's OFS price is at a 7 per cent discount over Monday's closing price of ₹1,506.40 on NSE.

 

DIPAM secretary Arunish Chawla said the OFS has a base offer of 2.52 per cent and an additional 2.52 per cent as the green-shoe option in case of over subscription.

 

Cochin Shipyard OFS opened for non-retail investors today, while retail investors can bid on July 8. 

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Govt stake in Cochin Shipyard  The government currently holds a 67.91 per cent stake in Cochin Shipyard.  Cochin Shipyard OFS: Should you partiipate? 

Independent market expert Ambareesh Baliga said the OFS price offers a decent gap and recommends that retail investors participate in the stake sale.

 

"Despite the stock's decline, which is primarily driven by the OFS announcement, the discount offered provides an attractive entry point for those looking to invest in the shipbuilding sector," he said, adding that Cochin Shipyard's long-term growth prospects remain intact, given the government's focus on expanding capacity, improving access to long-term financing, and creating a globally competitive ecosystem.  Cochin Shipyard stock: Technical view 

Harish Jujarey, head - technical equity research, Prithvi Finmart, said that Cochin Shipyard has been trading within a broad consolidation range over the past few days. In today's session, the stock declined after the government announced an OFS. From a technical perspective, the immediate support is placed around the ₹1,420. A decisive break below this zone could trigger extended weakness towards ₹1,380 and lower levels. 

 

However, if the stock manages to hold above ₹1,420, a short-term pullback is likely. In that case, the stock may recover towards its 200-day moving average, which is currently placed near ₹1,580, he added.

  Cochin Shipyard is a Miniratna PSU operating under the Ministry of Ports, Shipping and Waterways. It is the largest shipbuilding and ship repair facility in the country.  

So far in the current fiscal, the government has sold stake via OFS in six public sector entities -- Central Bank of India, Coal India, NHPC, NLC India, GIC and IRFC, garnering a cumulative ₹18,561 crore.

 

For the full fiscal year, the government has budgeted to raise ₹80,000 crore via PSU disinvestment and asset monetisation.