Cochin Shipyard Drops 3% on OFS Rumour

Shares of Cochin Shipyard Ltd touched a day low of Rs 1,418.00 on 22 June after reports emerged that the government was planning to sell a part of its stake in the defence shipbuilder through an Offer for Sale at a steep discount.

The stock slid sharply from its opening before recovering after New Delhi officially denied the reports. Reports citing unidentified sources, first carried by CNBC-TV18, said the central government was considering an OFS of around 6% to 8% of its holding in Cochin Shipyard.

The floor price, the sources suggested, could be set at a discount of 6% to 8% to the prevailing market price to attract investors. No official exchange filing was made by the company on this.

When investors hear the word OFS at a discount, they sell first and ask questions later. The logic is simple: if the government is about to offer shares cheaper, why hold at the current price? That is exactly what played out in the morning session.

But by early afternoon, the Finance Ministry stepped in. A government official told NDTV Profit directly: ‘No stake sale is planned in Cochin Shipyard at present.’ That single line stopped the slide.

A bit of background on why disinvestment rumours keep circling this stock. The President of India currently holds a 67.91% stake in Cochin Shipyard.

SEBI rules require that at least 25% of shares in a listed company be held by the public, meaning promoters can hold a maximum of 75%. At 67.91%, the government is already within the permitted limit and is not under any regulatory pressure to reduce its stake.

The OFS speculation, in this case, appears to be part of the broader disinvestment programme rather than a compliance-driven sale.
The denial came against a backdrop of active government stake sales elsewhere.

Since May 21, the Centre has raised close to Rs 14,000 crore through OFS transactions in Coal India, NHPC, NLC India, Central Bank of India and General Insurance Corporation of India.

At 15:11 pm on NSE, shares were trading up 0.89% at Rs 1,471.00, well above the day low, suggesting the government denial largely calmed nerves.

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