Hindustan Copper Ltd. (HCL) shares experienced a significant drop of 6% today as the Indian government commenced its Offer for Sale (OFS). This two-day divestment aims to offload up to a 6% stake in the public sector undertaking, with non-retail investors placing their bids on the first day.
Government Sells 6% Stake at Discount
The government, which held a 66.14% stake in Hindustan Copper as of June 30, intends to sell a base size of 3% (approximately 2.9 crore shares) with an option to retain oversubscription of another 3%. This brings the total potential offer size to 6% of the company's equity. The floor price for the issue has been set at Rs 514 per share, representing a 10% discount from the previous closing price.
Following the announcement and the start of the OFS, Hindustan Copper shares opened at Rs 540 apiece, marking a 5.85% decline. This marks the ninth OFS undertaken by the government in the current fiscal year (FY2026-27), contributing to its divestment targets.
Copper Market Dynamics Influence Stock
Despite the current share price dip, Hindustan Copper has seen an upward trend recently, gaining 13% over the past month. This surge is attributed to strengthening copper fundamentals globally. Global copper inventories at the London Metal Exchange (LME) and Shanghai Futures Exchange (SHFE) have been tightening, partly due to increased shipments to the US ahead of potential tariff decisions.
Analysts from Anand Rathi noted a consistent withdrawal of copper inventories from LME warehouses in South Korea, Taiwan, and Singapore since mid-May, leading to a 47% drawdown. This depletion, coupled with reduced yearly guidance from global miners, Congo's export ban on raw copper concentrates, Indonesia’s Gresik smelter outage, and Chile's trimmed output forecasts, has provided support to global copper prices.
Analyst Outlook Remains Positive
Even with the OFS-induced volatility, Anand Rathi maintains a "BUY" rating on Hindustan Copper. In an August 18 note, the firm expressed confidence in HCL’s future growth prospects, citing copper fundamentals as "one of the strongest in non-ferrous metals." They have set a DCF-based target price of Rs 715 for the stock.
OFS Schedule and Employee Participation
The OFS is structured over two days: August 25, 2026, for non-retail investors, and August 26, 2026, for retail investors. Non-retail investors who bid on the first day can opt to carry forward unallotted bids to the second day for allocation in any unsubscribed retail portion. Additionally, 25,000 shares (0.0026% of equity) are reserved for eligible employees, who can apply for shares worth up to Rs 5,00,000.