NHPC tanks as OFS opens

NHPC, state-run hydropower company, declined as much as 4.58% to Rs.73.66 apiece on the NSE in the early trade today as the government announced an offer for sale (OFS) to sell a stake in the company.

The government on Monday said it would sell up to 6% stake in NHPC at a floor price of Rs.71 per share through an offer for sale (OFS) beginning on Tuesday.

The floor price of Rs.71 per share is at an 8% discount over Monday's closing price of the scrip at Rs.77.19 on the BSE. Shares of NHPC closed down 2.07% over the previous close.

The OFS opened for non-retail investors today and for retail investors will open on June 3.

Sale of over 60.27 crore shares representing a 6% stake at a floor price of Rs.71 a share would fetch about Rs.4,200 crore to the exchequer.

This will be the third OFS of a public sector company in the current fiscal year. Last week, the government sold a 2% stake in Coal India via OFS to mop up Rs.5,542 crore. In May, it sold 8.08% in the Central Bank of India to raise Rs.2,266 crore. Together, the disinvestment proceeds so far in FY27 stand at Rs.7,808 crore.

The FY27 Budget has estimated a mop-up of Rs.80,000 crore through disinvestment and asset monetisation, more than double the Rs.33,837 crore given in the Revised Estimates for FY26.

Usually OFS floor price is set at a discount to the last traded market price to attract strong investor demand and ensure the issue is fully subscribed. And stocks often decline when an OFS is announced because the discounted floor price acts as a near-term benchmark, prompting traders to adjust their positions.

In simple terms, if the government is offering shares at, say, Rs.95 while the stock is trading at Rs.100, investors may expect the market price to move closer to Rs.95. As a result, some traders sell the stock before the OFS, putting downward pressure on the share price. Additionally, the prospect of a large supply of shares entering the market can create temporary selling pressure and weigh on sentiment.