Synopsis: Coal India Limited shares fell 7% after the Government of India announced an OFS for up to 2% stake sale at a floor price of ₹412 per share, below the market price. The offer opens on May 27 for non-retail investors and on May 29 for retail investors.
The shares of the large-cap company specialising in the exploration, production, processing, and marketing of coal, and the world’s single largest coal producer, were in the spotlight during today’s trade after the government launched a major stake sale through the OFS route.
With a market capitalization of Rs. 2,74,487.92 crores on the day’s trade, the shares of Coal India Ltd declined 6.6 upto percent, making a low of Rs. 427.80 per share compared to its previous closing price of Rs. 458.25 per share.
What Happened
The Government of India, through the Ministry of Coal, has announced an Offer for Sale (OFS) for up to 6.16 crore equity shares of Coal India Limited, representing a 1% stake, with an additional 1% stake available under the oversubscription option. The OFS will open for non-retail investors on May 27, 2026, and for retail investors, employees, and carry-forward bids on May 29, 2026, through both BSE and NSE.
The floor price for the OFS has been fixed at Rs. 412 per share, implying a discount of up to 10% from the previous day’s closing price. The stock was trading above this level before the announcement, indicating an attractive discount for investors. The government has appointed Axis Capital, ICICI Securities, JM Financial, Kotak Securities, and SBICAP Securities as the brokers for the issue. Retail investors will have 10% of the offer reserved for them, while employees may also apply under a separate employee category.
The allocation for non-retail investors will happen on a price-priority basis, and institutional investors may carry forward unallotted bids to the retail day. Mutual funds and insurance companies will have at least 25% of the non-retail portion reserved, subject to valid bids. Retail investors can bid either at the cut-off price or above the floor price.
The government also stated that the OFS may be cancelled if sufficient demand is not received at or above the floor price. Settlement for non-retail investors will happen on T+1 day, while retail and employee category settlements will be completed on T+2 day as per SEBI OFS guidelines.
Morgan Stanley on Coal India
Morgan Stanley maintained its “Equal-weight” rating on the stock with a target price of Rs. 420 with a downside potential of 8 percent from the previous day’s close. It noted that the OFS floor price of Rs. 412 remains at a material discount to the prevailing market price, which could attract investor participation but may also create short-term pressure on the stock.
The brokerage further highlighted that the overhang from the government stake sale is expected to keep Coal India shares volatile in the near term, as investors monitor demand, pricing, and overall market sentiment around the OFS.
Financials & Others
The company’s revenue rose by 22.91 percent from Rs. 37,825 crores in March 2025 to Rs. 46,490 crores in March 2026. Meanwhile, Net profit rose from Rs. 9,593 crores to Rs. 10,908 crores in the same period.
Coal India Limited continues to maintain strong financial metrics, with ROCE at 35.3%, ROE at 28.5%, and a low debt-to-equity ratio of 0.12, reflecting efficient operations and a healthy balance sheet. The stock is currently trading at a P/E of 8.81, significantly below the industry average P/E of 16.9, indicating attractive valuation levels.
The company also offers a strong dividend yield of 5.78% and has maintained a healthy dividend payout ratio of 47.1%. Additionally, Coal India has delivered an impressive 3-year average ROE of 38.2%, highlighting consistent profitability and shareholder returns.
Coal India Limited is the largest coal-producing company and a Maharatna PSU under the Government of India. The company plays a key role in meeting India’s energy needs by supplying coal mainly to power generation, steel, cement, and other industrial sectors through its large mining operations spread across the country.
The company operates through multiple subsidiaries and has a strong nationwide presence with extensive coal reserves, rail connectivity, and production infrastructure. Along with its dominant market position, Coal India is also known for its strong cash flows, consistent dividend payouts, and strategic importance in supporting India’s growing electricity demand and industrial growth.
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