New Delhi: The Government of India has opened a new investment opportunity in Bharat Heavy Electricals Limited (BHEL) through an Offer For Sale (OFS). The offer is now available for retail investors after being open earlier only for large institutional investors.
The government has fixed a floor price of Rs 254 per share. Investors can bid at this price or higher. Through this OFS, the government aims to reduce its stake and raise funds for the national treasury.
How Much Stake Is Being Sold
The government is selling about 3 percent stake in BHEL through this OFS. It has also kept a greenshoe option of another 2 percent stake. If the full 5 percent stake is sold, the total deal value could reach around Rs 4,422 crore.
Since this is a promoter stake sale, the money will go directly to the government and not to BHEL. So, this will not directly affect the company’s balance sheet or debt levels. Before the sale, the government held about 63.17 percent stake in BHEL.
Pricing And Discount Details
When the OFS was announced, the floor price of Rs 254 was about 8 percent lower than the market price of Rs 276. After the announcement, BHEL shares fell about 5.5 percent to around Rs 260, reducing the effective discount for retail investors.
In terms of performance, BHEL stock has given around 30 percent return in the last one year and about 18 percent return in the last six months. Over the long term, it has delivered multibagger returns of more than 570 percent.
Business Outlook And Growth Drivers
Brokerages like JM Financial remain positive on BHEL due to strong power sector demand in India. India plans to increase coal-based power capacity to 340 GW by 2047, which may create large order opportunities for BHEL.
Old low-margin projects are getting completed and new orders are expected to have better profit margins. EBITDA margin is expected to rise to about 10.7 percent by FY28 from about 4.4 percent in FY25.
