Coal India OFS: Govt may sell 3-4% stake worth ₹10,000 crore

What CNBC-TV18 reported on the likely Coal India OFS

The Indian government is likely to divest a 3 percent to 4 percent stake in Coal India through the offer-for-sale (OFS) route, CNBC-TV18 reported on Thursday, citing sources. The stake sale is estimated to be worth around ₹10,000 crore, the report said. The report also said the government is likely to offer the shares at a discount to the prevailing market price. At this stage, the report points to ongoing discussions rather than a final announcement.

Coal India is a state-run miner and one of the government’s key listed holdings. A minority stake sale through OFS is typically aimed at raising funds while increasing public shareholding. The CNBC-TV18 report indicated the proposed OFS could be launched soon, but the exact timing and structure were still under discussion. There has been no official confirmation from the government or Coal India, as per the report.

Why the OFS route matters for a minority stake sale

An OFS is a secondary market mechanism used by promoters, including the government, to sell shares in a listed company. It is commonly used for disinvestment when the intent is to dilute a small portion of equity without changing control. The report’s reference to a discount is consistent with how OFS transactions are often structured to support participation.

For investors, the pricing and allocation details are usually the key variables. In this case, the only confirmed details in the report are the likely stake range of 3 percent to 4 percent, the estimated value of ₹10,000 crore, and the expectation of a discount to market price. With no official filing yet, finer points such as floor price, issue dates, or category-wise allocation remain unconfirmed.

What the reported stake size implies

A 3 percent to 4 percent divestment in Coal India, at an estimated ₹10,000 crore value, suggests a large transaction by Indian equity market standards. The report also noted that such a dilution would raise substantial funds while increasing public shareholding in the company. Minority stake sales are often used to meet disinvestment and broader fiscal targets.

Since the report does not provide the government’s current shareholding or the company’s market capitalisation, the stake value should be treated as an estimate attributed to sources. It also does not specify whether the OFS would include a green shoe option or whether it would be split into multiple tranches. CNBC-TV18 sources indicated the government is still discussing timing and structure.

A broader shift in disinvestment strategy

Separately, the government is described as recalibrating its FY27 disinvestment strategy with a greater focus on minority stake sales via OFS and new CPSE listings. The Department of Investment and Public Asset Management (DIPAM) has been tasked with accelerating preparations for listing unlisted CPSEs and undertaking OFS in already listed firms, according to the provided information.

The plan mentioned includes targeted public listings for Export Credit Guarantee Corporation (ECGC) and India Infrastructure Finance Company Ltd (IIFCL). The provided information also said the government estimates around ₹80,000 crore from miscellaneous capital receipts in FY27. These references frame the Coal India OFS as potentially part of a wider pipeline rather than a one-off transaction.

LIC and other PSU OFS plans mentioned in the pipeline

The provided information also points to possible stake dilution in Life Insurance Corporation (LIC) via OFS. It said LIC is considering bonus shares in a 1:1 ratio to make any potential OFS more affordable and accessible to a larger investor base. Another part of the provided information said the government had initially considered a 2.5 percent to 3 percent stake sale in LIC via OFS, but sources were indicating only a 1 percent to 2 percent tranche was likely in Q4 FY26.

That revised LIC tranche was described as raising roughly ₹13,000 crore to ₹14,000 crore, versus around ₹24,000 crore that a 3 percent sale might have fetched. These figures are part of the broader set of disinvestment references in the material provided, and they highlight how tranche size and pricing assumptions can materially change expected proceeds.

IRFC OFS as a recent reference point

The provided information includes details of an OFS for Indian Railway Finance Corporation (IRFC). DIPAM’s Secretary said the government would divest a 2 percent equity stake through OFS, with an option to sell an additional 2 percent under a green shoe clause. The floor price for that OFS was set at ₹104 per share.

At ₹104 per share, the government would be able to garner about ₹5,430 crore by offloading up to 4 percent stake, according to the provided text. The offer involved up to 26.13 crore shares for the 2 percent base offer size, with an option for another 26.13 crore shares representing an additional 2 percent. The OFS was described as opening for non-retail investors on February 25, with retail investors able to bid on February 26.

Other transactions and listings referenced alongside Coal India

Beyond Coal India and LIC, the provided information mentions multiple smaller PSU OFS deals being prepared for launch, depending on market conditions. It also lists state-owned entities such as Rail Vikas Nigam Ltd (RVNL), Garden Reach Shipbuilders & Engineers Ltd (GRSE), and Neyveli Lignite Corporation (NLC) as being on a watchlist where approvals were reportedly in place. Fertiliser firms Rashtriya Chemicals & Fertilizers Ltd (RCF) and National Fertilizers Ltd (NFL) were also mentioned as having board approvals.

Coal India also appeared in another context: it will start investor roadshows for its subsidiary Central Mine Planning and Design Institute in February, with a plan of an IPO by March, as per the provided information. That IPO was expected to be an offer for sale, and sources said BCCL and CIL would initially disinvest 10 percent to 15 percent stake. This does not confirm any direct linkage to Coal India’s own OFS, but it adds to the list of PSU capital market actions referenced.

Key numbers at a glance

Market impact and what investors will watch

If the Coal India OFS proceeds, investors will focus on the discount offered to the prevailing market price, since the report explicitly flags discounted pricing as a participation driver. They will also track the final stake size within the 3 percent to 4 percent range, because that determines supply coming to the market. The structure and timing are also central, and CNBC-TV18 sources said discussions are ongoing.

In the broader context, the multiple references to OFS plans across PSUs, possible CPSE listings such as ECGC and IIFCL, and the government’s FY27 receipts estimate of ₹80,000 crore suggest sustained supply of PSU paper could be a recurring theme. But none of this changes the fact that the Coal India OFS itself is not officially confirmed yet. The next concrete step, if any, would typically be an exchange filing or an official announcement detailing the offer window and price mechanism.

Conclusion

CNBC-TV18 has reported, citing sources, that the government is likely to divest a 3 percent to 4 percent stake in Coal India via OFS, with the transaction estimated at around ₹10,000 crore and potentially priced at a discount to market. The report also indicates the OFS could be launched soon, though timing and structure are still being discussed. Until there is an official confirmation, investors will be watching for a formal OFS announcement that sets out the floor price, dates, and final offer size.