When the government needs to raise capital without relinquishing control of a public sector company, the offer for sale (OFS) route becomes one of its preferred tools.
Over the years, minority stake sales in PSUs have helped fund fiscal requirements while improving public shareholding and market liquidity.
For FY26, the government budgeted ₹47,000 crore from disinvestment and asset monetisation, which was later revised to ₹33,840 crore. Of this, around ₹15,560 crore was expected from disinvestment, while the remaining ₹18,840 crore was to come from asset monetisation and other miscellaneous capital receipts.
In FY27, capital receipts have become even more crucial as geopolitical tensions have adversely affected the Indian government's fiscal position. Consequently, the government has set an ambitious target of ₹80,000 crore under capital receipts for FY27.
Against this backdrop, investors are closely tracking PSU companies where the government still holds a large stake. These companies could emerge as potential OFS candidates, especially if market conditions remain favourable.
#1 Life Insurance Corporation of India
LIC is India's largest life insurance company, offering a wide range of insurance, pension, and investment products. With a dominant market share, it manages one of the country's largest pools of long-term savings and is also among the biggest institutional investors in the Indian stock market.
Its total premium income at the end of FY26 stood at around ₹5.4 trillion (tn).
The government plans to sell up to a 2% stake in LIC, potentially raising about ₹10,000 crore. This is part of a major plan to gradually reduce the government's 96.5% stake in LIC to the required minimum public shareholding of 75%.
While the current stake sale may be small, the government could consider additional LIC stake sales over the coming years to reduce its stake to 75%.
#2 IRFC
IRFC is the dedicated financing arm of the Indian Railways. The Navratna PSU primarily raises funds from domestic and international markets to finance the capital expenditure undertaken by the Ministry of Railways. It manages assets worth ₹4.8 tn.
The government has launched an OFS of up to a 2% stake in IRFC, with a floor price of ₹91 per share.
The stake sale is expected to fetch around ₹2,200 crore if the entire 2% issue, including the greenshoe option, is subscribed. The bidding is still underway as of 25 June 2026.
The OFS is primarily aimed at increasing public shareholding, as the government currently owns 84.65% of IRFC, above Sebi's mandated 75% promoter holding limit.
Even after the 2% dilution, the government's stake will remain at around 82.65%, meaning additional stake sales are likely over the coming years to meet the minimum public shareholding requirement.
#3 Indian Overseas Bank
Indian Overseas Bank (IOB) has a dominant presence in South India, particularly in Tamil Nadu. IOB operates 3,494 domestic and 4 overseas branches. About 58% of IOB's domestic branches (around 2,040) are located in rural (27%) and semi-urban regions (31%). The bank's total assets stand at ₹6.8 tn.
While the government has not announced an OFS for IOB, the lender remains one of the strongest candidates for a future stake sale. The government currently holds around 92.4% in the bank, significantly above SEBI's mandated 75% promoter holding limit.
The government has reduced its holding from 96.4% in December 2024 to 92.4% in March 2026. However, this is not sufficient to bring the government's holding below the regulatory threshold.
To comply with the minimum public shareholding norms, the government will eventually have to dilute another 17.4% stake, either through one or multiple rounds of OFS, qualified institutional placements, or other market routes.
Given the large gap that exists, IOB is widely viewed as one of the most likely PSU candidates for further stake dilution.
#4 Central Bank of India
The Central Bank of India is one of the country's oldest public-sector banks. The bank operates a network of 4,585 branches, with 65% located in Rural and Semi-Urban areas. The bank's total business expanded to ₹8.12 tn as of March 2026.
The government's stake in the bank stood at 89.3% in March 2026 and dropped to 81.2% in May 2026. This is higher than Sebi's prescribed 75% promoter holding limit. Thus, it remains one of the strongest candidates for a future stake sale.
To comply with the minimum public shareholding norms, the government will eventually have to reduce its stake by more than 6.2 percentage points. This is likely to happen through one or multiple OFSs over the coming years.
#5 UCO Bank
UCO Bank is a government-owned bank serving retail customers, businesses, and agricultural borrowers.
The bank's physical footprint (3,412 domestic branches) is concentrated in the East (30%) and North India (26%). The bank's global business assets stood at ₹5.9 tn as of March 2026. No OFS has been announced for UCO Bank so far.
However, the bank stands out as one of the strongest contenders for a future government stake sale, considering the Centre still owns around 90.9% of the lender. In fact, the government last sold a 4.4 percentage points stake during the March 2025 quarter.
However, with public shareholding still well below SEBI's prescribed 25% threshold, the government will eventually have to offload a sizeable stake to meet regulatory norms. Thus, UCO Bank could see multiple OFS rounds over the next few years as the government gradually reduces its holding.
#6 Punjab & Sind Bank
Punjab & Sind Bank is a public-sector bank focused on retail, agriculture, MSME, and corporate banking. It has a pan-India network of 1,654 branches with a significant presence in Punjab. Its total assets stand at ₹2.6 tn.
The government last sold 4.4% stake during the March 2025 quarter. Punjab & Sind Bank has not announced an OFS, but it’s another strong contender for a future stake sale. The government still owns 93.8% of the bank, leaving public shareholding far below Sebi's mandated 25% threshold.
With one of the highest government holdings among listed public-sector companies, the bank will require substantial dilution to meet regulatory requirements.
This makes Punjab & Sind Bank one of the most likely candidates for multiple OFSs over the next few years, unless the government chooses another route to increase public shareholding.
#7 Mazagon Dock Shipbuilders
Mazagon Dock Shipbuilders is one of India's leading defence shipyards. The company designs and builds warships, submarines, and other naval vessels for the Indian Navy and Coast Guard, while also undertaking ship repair and refit projects.
The government last sold a 3.6% stake during the June 2025 quarter. Although the government has not announced a fresh OFS, Mazagon Dock Shipbuilders remains a strong candidate for another stake sale.
The centre currently owns around 81.2% of the defence PSU, above SEBI's prescribed 75% promoter holding limit. Thus, further divestment will be required to increase public shareholding to at least 25%.
Given the company's strong market performance, healthy order book, and high investor interest in defence stocks, Mazagon Dock is considered a likely candidate for another OFS over the medium term.
#8 General Insurance Corp. of India
General Insurance Corp. of India (GIC) is India's largest reinsurance company, providing risk cover to insurance companies. It underwrites a wide range of general insurance risks across segments such as property, engineering, marine, aviation, health, and agriculture.
The government recently concluded an OFS in GIC, offering up to a 5% stake at a floor price of ₹352 per share. The transaction was expected to raise around ₹30 bn.
Despite this dilution, the government's holding is expected to remain at around 77.4%, which is above SEBI's 75% promoter holding limit. As the government's holding is still above 75%, additional stake sales may be required over time to meet the minimum public shareholding requirement.
#9 New India Assurance Company
New India Assurance Company (NIACL) is India's largest non-life insurance company by market presence. It offers non-life insurance products across motor, health, property, marine, crop, travel, and commercial insurance segments, serving both domestic and international markets.
The government is yet to undertake an OFS in NIACL after its listing. However, the insurer remains a strong contender for a future OFS as the government holds around 85.4% of the company, well above SEBI's 75% promoter holding limit.
The government has previously indicated its intent to gradually reduce its holding in listed public-sector insurers to meet the minimum public shareholding requirement.
As NIACL still needs a dilution of more than 10 percentage points, additional OFSs are a likely route to increase public ownership while supporting the center’s broader disinvestment program.
#10 Bharat Heavy Electricals
The government recently concluded an OFS in Bharat Heavy Electricals (BHEL), reducing its stake by 5% to around 58.2%.
While the current promoter holding is already below SEBI's 75% limit, BHEL could be on the government's radar for future stake monetisation if market conditions remain favourable.
#11 Hindustan Aeronautics
The government has not announced any further OFS since selling a 3.5% stake in March 2023. It holds a 71.6% stake in HAL.
Thus, the defence PSU remains a potential candidate for future stake monetisation as it is one of the government's most valuable listed assets.
#12 IRCON International
The government has not announced an OFS in Ircon since reducing its stake through an OFS in the December 2023 quarter. It currently owns around 65.2% of the railway infrastructure company.
Although IRCON already complies with SEBI's minimum public shareholding norms, it remains one of the railway PSUs that could be considered for future stake monetisation.
If the centre looks to monetise high-quality listed assets to meet its divestment targets, IRCON could be among the companies considered for another stake sale.
Conclusion
With the government targeting higher capital receipts in FY27, stake sales in listed PSUs are expected to remain an important part of its disinvestment strategy.
Companies that still have high government ownership or enjoy strong market valuations are likely to stay on the radar for future OFSs.
While no official announcements have been made for most of these companies, they stand out as the most probable candidates based on current shareholdings and the government's monetisation strategy.
Instead of relying solely on hype, investors need to carefully analyse the company's fundamentals, including financial performance, corporate governance practices, and growth strategies.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com