Govt to offload 4.8% stake in Mazagon Dock Shipbuilders via OFS; PSU stock dives 7%

Shares of Mazagon Dock Shipbuilders plunged 7% on Friday after the state-owned company informed exchanges that the central government plans to divest stake in the company through an offer for sale (OFS). The Centre proposes to offload as much as 4.83% of its stake in shipbuilding company at a floor price of ₹2,525 per share. This price reflects a 7.7% discount to Thursday’s closing price of ₹2,735.45 on the BSE, valuing the total stake at ₹4,918.19 crore.

Snapping two sessions gaining streak, Mazagon Dock shares dropped 7% to hit an intraday low of ₹2,542.50 on the BSE amid surge in selling. As many as 46.5 lakh shares changed hands over the counter compared to two-week average of 1.81 lakh stocks.

At the time of reporting, Mazagon Dock Shipbuilders share price was quoting at ₹2,558, down 6.5%, with a market capitalisation of ₹1.03 lakh crore. The PSU stock touched its 52-week high of 2,929.98 on July 5, 2024, and a 52-week low of ₹1,046 on May 13, 2024.

In the last one year, Mazagon Dock shares have delivered a solid return of 133% to its shareholders, while it added over 25% in the past six months. The counter rose 14% year-to-date (YTD) and over 18% in a month.

Govt to sell stake worth ₹4,918 crore

The central government, which currently holds 84.83% stake, plans to sell up to 4.83% stake in the defence PSU through an OFS from April 4-7.

Under the OFS, the government will initially sell up to 1.14 crore equity shares of the company, (representing 2.83% of equity share), with a greenshoe option to sell additional 2% stake. If the issue gets fully subscribed, the government plans to sell additional 80.67 lakh equity shares, taking the total stake sale to 4.83%, it said in a BSE filing.

At the floor price of ₹2,525 per share, the value of the OFS is estimated to be ₹4,918.19 crore.

As per the exchange filing, additionally, 50,000 equity shares of the company (equivalent to 0.26% of the offer shares) may be offered to eligible employees of the firm, subject to requisite approvals. The eligible employees may apply for equity shares amounting up to ₹500, the release noted.

The OFS opened today (April 4) for institutional investors and retail investors and employees can bid for the same on April 7.

The sale, managed by IDBI Capital Markets, will be conducted on the both stock exchanges – the BSE and NSE.

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