Government to Sell Up to 6% Stake in Hindustan Copper Through OFS at ₹514

Government aims to raise around ₹2,982 crore through the offer for sale, with a 3% base offer and an additional 3% green-shoe option.

The Government of India will sell up to 6% of its stake in Hindustan Copper Ltd. (HCL) through an Offer for Sale (OFS) to raise around ₹2,982 crore. The sale will take place on Tuesday and Wednesday, during which the government will offer a 3% base stake and can sell another 3% if the issue is oversubscribed.

The Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla announced the divestment plan, saying the government will offer 3% equity in Hindustan Copper through the OFS, along with another 3% green-shoe option.

OFS floor price set at ₹514

The government has fixed the OFS floor price at ₹514 per share. This is a discount of about 10% to Hindustan Copper's closing price of ₹573.55 on the BSE on Monday.

At the maximum 6% stake sale, the government could raise close to ₹2,982 crore based on the stated offer size and floor price.

The OFS mechanism allows the government to sell shares directly to investors without issuing new equity. Thus, the proceeds from the transaction will go to the selling shareholder while the total number of shares outstanding remains unchanged.

Government Stake Could Fall to 60.14%

The Centre currently owns around 66.14% of Hindustan Copper. If the government exercises the full 6% green-shoe option, its holding would decline to around 60.14%.

Despite the reduction, the government would still be the majority shareholder in the state-owned copper producer.

Hindustan Copper is India’s only vertically integrated copper producer, with activity in exploration, mining, beneficiation, smelting and refining. The company is looking to increase its production capacity as demand for copper is rising in regions including renewable energy, electric vehicles, power transmission and infrastructure.

Retail Investors Are Given Reserved Portion

The OFS also includes provisions for retail investors. 10% of the offer size has been reserved for retail investors, and 25,000 shares have been earmarked for eligible employees, DIPAM said.

The OFS floor price discount could attract investor interest, particularly if market prices remain much above the ₹514 level during the offer period.

But investors will need to take into account the possible impact of the government's stake sale on short-term trading activity. Large OFS transactions can temporarily increase supplies of shares in the stock market and influence price movements around the issue period.

Government Accelerates Disinvestment Programme

Hindustan Copper stake sale comes as the government has stepped up its disinvestment programme during the current financial year.

According to the information provided by DIPAM, the government has already raised ₹52,716 crore in FY27 through stake sales in several companies, including Life Insurance Corporation of India, Coal India and Central Bank of India.

The government’s accelerated asset-sale programme is intended to generate further revenue and slowly reduce its holdings in some public-sector companies.

The recent stake sale also comes at a time of increasing global economic and geopolitical uncertainty. The government has been trying to strengthen revenues and control fiscal pressures because of risks from world events, including the war in West Asia.

What does the Hindustan Copper OFS mean for investors?

For investors, the OFS allows them to buy shares at a floor price below the stock's previous closing price. Where the final allotment price and demand will come from institutional and retail investors.

If this is successful, the transaction will increase public shareholding in Hindustan Copper, which will in turn enhance the stock market liquidity over time.

At the same time, investors will have to consider Hindustan Copper's earnings prospects, copper prices, production expansion plans and government policy before making investment decisions. In the current scenario, India will need copper demand as it grows power infrastructure and renewable energy capacity and electrification.

The decision by the Indian government to offer up to 6% of Hindustan Copper is thus a major disinvestment transaction and an important development for investors tracking India's metals and mining industry.