Hindustan Copper shares plunge 7% as govt looks to sell up to 6% stake worth ₹3,000 cr

Shares of state-owned Hindustan Copper witnessed sharp selling pressure on Tuesday after the government announced plans to sell up to a 6% stake in the company through the offer for sale (OFS) route, marking its first such stake sale in the copper producer in nearly five years.

Following the announcement, Hindustan Copper shares fell as much as 6.88% in early trade to ₹534 on the BSE. The market capitalisation of the PSU stock dropped to ₹51,815 crore, with nearly 10 lakh shares changing hands over the counter in the first hour of trade so far.

Investor sentiment was hit after the government fixed the OFS floor price at ₹514 per share, representing a discount of about 10.38% to Hindustan Copper's previous closing price of ₹573.55 on the BSE.

The government plans to offload a 3% stake in the copper producer, with a green-shoe option to sell an additional 3% in the event of strong demand. Based on the floor price, the sale of the entire 6% stake could fetch the government nearly ₹3,000 crore.

The transaction could further reduce the government's holding in Hindustan Copper from 66.14%. If the entire green-shoe option is exercised, the government's stake would fall to about 60.14%, while the sale of only the base 3% stake would bring it down to approximately 63.14%.

The OFS also has a retail component, with 10% of the shares on offer reserved for retail investors. In addition, 25,000 shares have been earmarked for eligible employees.

Centre raises ₹52,716 crore via OFS in FY27

So far in the current fiscal, the government has raised ₹52,716 crore through stake sales and other disinvestment transactions in public sector enterprises, achieving around 66% of its full-year ₹80,000-crore disinvestment and asset monetisation target.

The proceeds have come from transactions involving several central public sector enterprises and public sector financial institutions, including LIC, Coal India, Central Bank of India, IRFC, NHPC, GIC Re, Cochin Shipyard and NLC India.

Govt returns to Hindustan Copper OFS after five years

The proposed sale marks the government's return to the OFS route for Hindustan Copper after its previous stake sale in 2021. The government has steadily pared its holding in the state-run miner over the past decade through a combination of OFS transactions and equity dilution.

In 2015, the Cabinet Committee on Economic Affairs approved the sale of up to 15% of the government's stake in the company. Under that programme, the government sold 7% through an OFS in 2016 and subsequently divested another 6.83% in 2017 following strong investor demand.

The government's stake was further diluted after Hindustan Copper raised ₹500 crore through a qualified institutional placement (QIP) in April 2021. The QIP reduced the government's holding from 76.05% to 72.76%. Later that year, the government sold a further 6.62% stake through an OFS, bringing its holding down to the current 66.14%.

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