Cochin Shipyard OFS: Govt to exercise green-shoe option after 3.52x Day 1 subscription

The Centre on Tuesday decided to exercise the full green-shoe option in the offer for sale (OFS) of Cochin Shipyard Ltd after the issue attracted strong demand from institutional investors on the first day of bidding.

“The Offer for Sale in Cochin Shipyard Ltd received an overwhelming response from investors and was oversubscribed 3.52 times on Day 1. The government has decided to exercise the entire green-shoe option,” the department of investment and public asset management (Dipam) secretary Arunish Chawla said on social media platform X.

With the exercise of the green-shoe option, the government will now sell the full 5.04% stake in the state-owned shipbuilder, comprising the base offer of 2.52% and an additional 2.52% under the green-shoe option.

The OFS was launched with a floor price of ₹1,400 per share, about a 7% discount to the previous day's closing price of ₹1,504.75.

The issue opened for non-retail investors on Tuesday, while retail investors and eligible employees will be able to bid on Wednesday.

As of Tuesday's close, the Centre's holding in Cochin Shipyard stood at 67.91%, or 178.67 million shares. At the closing price of ₹1,504.75, the government's stake was valued at about ₹26,885.55 crore, while the company had a total market capitalization of ₹39,587.08 crore.

Following the sale of the entire 5.04% stake, the government's shareholding will decline to 62.87%, while it will continue to retain majority ownership and management control of the company.

Divestment goal

The transaction is part of the Centre's FY27 disinvestment programme. So far this fiscal year, the Centre has mobilized ₹18,561.16 crore through minority stake sales in listed public sector enterprises and ₹6,366.93 crore through asset monetization, taking the total receipts to ₹24,928.09 crore, or about 31.2% of the budgeted target of ₹80,000 crore.

The strong response to the Cochin Shipyard OFS comes amid sustained investor appetite for defence and shipbuilding public sector companies, which have benefited from the government's emphasis on indigenous manufacturing, naval modernization and maritime infrastructure.