Government Initiates Strategic Stake Sale in BHEL Through Offer for Sale
The Government of India has commenced a significant divestment initiative in the public sector undertaking Bharat Heavy Electricals Limited (BHEL) through an offer for sale (OFS), which opened for investors on Wednesday, February 11. This strategic move provides market participants an opportunity to acquire shares at a discounted price, as part of the administration's broader disinvestment program aimed at optimizing public asset management and enhancing fiscal resources.
Key Details of the BHEL Offer for Sale
Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), officially announced the transaction on social media platform X, stating, "Government offers to disinvest 3% equity in BHEL with an additional 2% as green shoe option." The floor price for the OFS has been firmly established at ₹254 per equity share, representing an approximate 8% discount compared to BHEL's closing price of ₹275.90 on the National Stock Exchange on Tuesday, February 10, which reflected a marginal gain of 0.46% in anticipation of the stake sale.
Comprehensive Breakdown of the OFS Structure
The offer for sale encompasses multiple critical components that investors must consider:
- Stake on Offer: The government intends to divest a 3% ownership stake in BHEL, translating to over 10.44 crore equity shares, through the OFS mechanism as a component of its ongoing divestment strategy.
- Floor Price Determination: The minimum price for the OFS has been fixed at ₹254 per share, which is strategically set below the recent market closing price to attract investor participation and ensure successful completion of the sale.
- OFS Schedule: The offering will be conducted across two consecutive trading days—February 11 and February 12—adhering to the standardized OFS framework prescribed by Indian stock exchanges.
- Greenshoe Option: Authorities have incorporated an oversubscription or greenshoe provision that permits the sale of an additional 6.96 crore shares, equivalent to 2% equity stake. This could potentially elevate the total divestment to 5% if fully exercised.
- Total Issue Valuation: At the base level of 3% stake sale, the transaction is estimated to be valued at approximately ₹2,650 crore. Should the 2% greenshoe option be entirely utilized, the aggregate deal size could expand to around ₹4,422 crore, significantly boosting government receipts.
- Seller Identification: The entity conducting the sale is the President of India, operating through the Ministry of Heavy Industries, which functions as the promoter of BHEL and currently maintains a substantial 63.17% shareholding in the company.
- Investor Participation Framework: Non-retail institutional investors are permitted to submit their bids exclusively on Wednesday, February 11, while retail investors will have their dedicated bidding window on Thursday, February 12, ensuring orderly market participation.
- Trading Window Specifications: The OFS will be executed during regular market hours on February 11, commencing at 9:15 AM and concluding at 3:30 PM through a specialized OFS platform designed for such transactions.
BHEL's Robust Third Quarter Financial Performance
BHEL demonstrated remarkable financial improvement in the third quarter ending December 2025, driven by enhanced operational execution and effective leverage. The state-owned engineering conglomerate reported a net profit of ₹382 crore for Q3 FY2026, a substantial increase from ₹125 crore recorded in the corresponding quarter of the previous fiscal year, representing an impressive 206% year-on-year growth.
Revenue from operations witnessed a healthy 16% year-on-year expansion, rising to ₹8,473 crore from ₹7,277 crore in the year-ago period. This growth trajectory reflects improved project execution capabilities and a strengthened order pipeline. Including other income streams, total income for the quarter reached ₹8,700 crore, compared to ₹7,393 crore in the same quarter last year.
On the expenditure front, total costs increased to ₹8,188 crore from ₹7,224 crore in Q3 of the previous fiscal year. Expenses related to materials and services escalated to ₹6,059 crore, aligning with heightened execution activities, while employee benefit expenses experienced a marginal rise to ₹1,531 crore. Finance costs provided some operational relief, declining sequentially to ₹182 crore from ₹195 crore in the September quarter, thereby supporting overall profitability margins.
Significant Order Acquisition Bolsters Business Prospects
In a parallel development on February 10, BHEL secured a letter of acceptance from Bharat Coal Gasification and Chemicals Limited for a prestigious project valued at approximately ₹2,800 crore, excluding applicable customs duties and goods and services tax. BCGCL operates as a joint venture between Coal India Limited, which holds a 51% controlling stake, and BHEL, which owns the remaining 49% equity share.
The order specifically pertains to the Syngas Purification Plant under the LSTK-2 package for BCGCL's ambitious coal-to-2,000-tonnes-per-day ammonium nitrate project located at Lakhanpur in Jharsuguda district of Odisha. Under this comprehensive contract, BHEL will undertake end-to-end responsibilities including design, engineering, equipment supply, civil construction works, erection, commissioning, and subsequent operations and maintenance services.
The project timeline anticipates achieving preliminary acceptance, encompassing commissioning and performance guarantee tests, within 42 months from the date of the letter of acceptance. Operations and maintenance services are contracted to continue for an additional 60 months thereafter, ensuring long-term engagement and revenue visibility for the company.
