Government to sell 3% stake in NLC India through OFS, sets floor price at Rs 303

The government on Monday announced an offer for sale (OFS) in state-run NLC India, seeking to divest up to 3% of its stake through a two-day share sale process. The OFS comprises a base offer of 2% equity, equivalent to 2.78 crore shares, along with a greenshoe option of another 1% stake, or 1.39 crore shares, in case of strong investor demand.

The government has fixed the floor price at Rs 303 per share, a discount to the stock’s previous closing price. Based on the floor price, the government stands to raise about Rs 842 crore through the base offer. If the greenshoe option is fully exercised, the total issue size could increase to around Rs 1,263 crore.

The OFS will open for non-retail investors on June 9, while retail investors and eligible employees can bid on June 10. The share sale will be conducted through a separate window mechanism on the BSE and NSE in line with Sebi’s OFS framework.

The transaction forms part of the government’s broader disinvestment programme and comes amid a strong run in PSU stocks over the past few years.

NLC India, formerly known as Neyveli Lignite Corporation, is one of India’s leading mining and power generation companies. The company operates lignite mines and thermal power stations while also expanding its renewable energy portfolio.

The PSU has emerged as a beneficiary of India’s rising power demand and the government’s focus on energy security. In recent years, the company has diversified beyond lignite mining into solar and other renewable energy projects as part of its long-term growth strategy.
The government highlighted NLC India’s strong operational and financial performance while announcing the OFS, describing the company as a long-term investment opportunity supported by consistent profitability and dividend payouts.NLC India has maintained a track record of returning cash to shareholders through regular dividends and has benefited from improving plant performance, higher power generation and growth in mining operations.

The OFS comes at a time when institutional and retail participation in government stake sales has remained healthy, particularly in profitable PSUs with stable cash flows and attractive dividend yields.

Investors will now watch subscription levels closely to gauge demand for the issue, especially given the government’s decision to keep a greenshoe option that allows it to sell an additional 1% stake if the offer is oversubscribed.