Hindustan Copper share price in focus as OFS opens for retail investors today. Should you apply?

Shares of Hindustan Copper are likely to remain in focus on Wednesday, 26 August, as the retail leg of the government’s Offer for Sale (OFS) opens for bidding.

The retail offering follows a strong response from non-retail investors on Tuesday, with the issue receiving more than three times the subscription. Encouraged by the demand, the government has decided to exercise the entire greenshoe option, increasing the potential stake sale to 6% from the initial base offer of 3%.

Under the OFS, the government initially offered to sell a 3% stake in Hindustan Copper, with an option to offload an additional 3% in the event of oversubscription. At the floor price of ₹514 per share, the total potential OFS size could amount to nearly ₹2,982 crore.

The non-retail portion was fully subscribed, paving the way for the government to exercise the additional 3% greenshoe option. The issue will now be open to retail investors, who can submit bids between 9:15 am and 3:30 pm through the separate OFS window available on the BSE and NSE.

At least 10% of the OFS size has been reserved for retail investors, while an additional 25,000 shares have been set aside for eligible employees.

The floor price of ₹514 represents a discount to Hindustan Copper’s recent market price, making the offer closely watched by investors as the government moves ahead with the second and final day of the stake sale.

Hindustan Copper OFS subscribed 3.41x on Day 1

The government’s Hindustan Copper OFS saw strong institutional participation on the first day of bidding on Tuesday, with the offer subscribed 3.41 times.

Following the overwhelming response, the government has decided to exercise the full greenshoe option, the Secretary of the Department of Investment and Public Asset Management (DIPAM) said in a social media post.

The decision will double the size of the stake sale from the initial 3% base offer to 6%, with the additional 3% stake being sold through the greenshoe option.

Should you participate in Hindustan Copper OFS?

Balaji Rao Mudili, Research Analyst at Bonanza, said the Government of India, which holds a 66.14% stake in Hindustan Copper, launched an Offer for Sale (OFS) on August 25. The base offer comprises a 3% stake, along with a 3% green-shoe option, taking the maximum offer size to around 5.80 crore shares at a floor price of ₹514 per share, representing a 10.38% discount to Monday's closing price.

At the floor price, the full 6% stake sale could fetch the government around ₹3,000 crore. Following the OFS, the government's holding would decline to roughly 60%, keeping it comfortably above the mandatory 51% threshold.

The first day of the OFS was reserved for non-retail investors and saw strong demand. The institutional portion was subscribed 3.41 times, with bids received for 8.91 crore shares against 2.61 crore shares on offer. Following the strong response, the government decided to exercise the entire green-shoe option. Retail bidding opened on August 26.

Copper prices provide a strong tailwind

Mudili noted that copper prices have remained supportive, with COMEX September futures touching a record $6.727 per pound, or around $14,830 per tonne, while the LME three-month contract closed at $14,251 per tonne after hitting a record closing level of $14,201.

The copper benchmark has gained nearly 14% in 2026, while the cash-to-three-month spread had recently touched a five-year high of $434 per tonne. Supply constraints, including production disruptions at major mines, have further supported prices.

These favourable copper prices have translated into strong operating leverage for Hindustan Copper. Q1 FY27 net profit surged 162.5% year-on-year to ₹352.37 crore, while revenue increased 81.4% to ₹936.50 crore. Operating EBITDA rose 168.2% to ₹457.87 crore, with the EBITDA margin at around 49%.

Mudili highlighted that management estimates a ₹20–25 crore change in profit for every $100 per tonne movement in copper prices, underlining the company's sensitivity to the commodity cycle.

Pure-play copper exposure adds to appeal

According to Mudili, one of the key attractions of the Hindustan Copper OFS is that the company is India's only listed pure-play copper company. It has access to around 45% of India's copper ore reserves and resources and holds all operating copper mining leases in the country.

Under its Vision 2030 plan, Hindustan Copper aims to increase ore production to 12.2 million tonnes by FY30, compared with 3.67 million tonnes in FY26. The expansion is backed by around ₹7,200 crore of capex, which is expected to be funded through internal accruals. FY27 production is targeted at around 4.7 million tonnes, representing approximately 28% growth over FY26.

Mudili added that the company's own projections envisage PAT rising to ₹1,568 crore by FY30, accompanied by higher dividends. He noted that the target could prove conservative given that FY26 profit had already reached ₹920.66 crore, although the strong copper price environment has been a major contributor.

The company is also nearly debt-free, funds its capex internally and reported an ROE of around 27.4% as of July 2026, he said.

Retail discount and copper cycle remain key risks

Despite the positive outlook, Mudili flagged several factors that investors should monitor. Retail investors are being offered the shares at around ₹520, with no additional retail discount. This leaves only around a 2.4% gap against Tuesday's market price of approximately ₹532.65.

He also pointed to a sharp increase in LME on-warrant copper inventories, which jumped 74.5% in a week, while the cash premium declined from $434 to $248 per tonne. Rising warehouse inventories could indicate improving near-term availability of copper and potentially reduce some of the supply tightness supporting prices.

Another factor is the potential impact of proposed US tariffs. Copper imported into the US could face a 15% duty from January 2027, rising to 30% from 2028, creating incentives for buyers to secure supplies ahead of the tariff implementation. This has contributed to COMEX copper trading at a premium to London prices, creating an arbitrage opportunity between the two markets.

Mudili also highlighted weakness in Chinese automobile demand, with July car sales declining 21.1% year-on-year. A slowdown in major copper-consuming markets, coupled with a correction in copper prices, could therefore weigh on Hindustan Copper's earnings.

Given the company's strong exposure to copper prices, every $100 per tonne movement in copper prices can have a material impact on profitability, making the commodity cycle an important factor for investors considering the OFS, he added.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.