Post-Mazagon Success, Centre Accelerates FY26 Disinvestment Roadmap
Following the ₹5,000 crore Offer for Sale (OFS) in Mazagon Dock Shipbuilders Ltd (MDL)—the first major PSU disinvestment of FY26—the Indian government is preparing a broader pipeline of stake sales to enhance non-tax revenue mobilisation. The disinvestment strategy will prominently feature OFS in Coal India, Life Insurance Corporation (LIC), Rail Vikas Nigam Ltd (RVNL), and Garden Reach Shipbuilders & Engineers (GRSE). These disinvestments are aimed at maintaining fiscal discipline while ensuring liquidity infusion through market-based mechanisms.
This shift underscores the government’s growing preference for OFS over strategic disinvestments, many of which have witnessed delays. Officials cited market receptiveness, financial performance of PSUs, and transaction preparedness as critical factors driving the OFS timelines.
Highlights:
Government to execute OFS in Coal India, LIC, RVNL, GRSE during FY26.
Follows a ₹5,000 crore OFS in Mazagon Dock Shipbuilders.
OFS model preferred amid strategic divestment delays and asset monetisation hurdles.
Coal India, LIC to Headline FY26 Disinvestment Program
According to senior officials familiar with the matter, Coal India and LIC are expected to headline the disinvestment plan for FY26. While Coal India was the top dividend contributor to the Centre in FY25—paying ₹10,252.09 crore—the company remains financially robust and attractive to institutional investors.
The government holds 63.13% stake in Coal India, just above the minimum threshold of 51%, making this OFS both strategic and sensitive. LIC, with a 96.50% government stake, is scheduled for a possible fourth-quarter OFS, contingent upon market conditions and improved post-listing performance visibility.
Highlights:
Coal India OFS expected earlier in FY26; LIC OFS likely in Q4.
LIC offering to be carefully timed, given post-IPO investor scrutiny.
Coal India was FY25’s highest CPSE dividend contributor.
RVNL and GRSE Offerings Planned Post-Q1, Advisors Appointed
Sources indicate that the RVNL OFS is scheduled for post-Q1 FY26, once FY25 financial results are declared and roadshows are conducted. Similarly, transaction advisors have been appointed for GRSE, with an offering expected later in the year.
These mid-cap PSU offerings are expected to attract both retail and institutional interest, especially as PSU stocks have seen strong re-rating in recent quarters. RVNL and GRSE are also backed by robust order books and project pipelines in the defence and infrastructure space.
Highlights:
RVNL OFS likely after Q1 FY26, post earnings disclosure.
GRSE OFS planned later in FY26, advisors already appointed.
Both firms offer exposure to rail and defence manufacturing sectors.
Strategic Disinvestment Focus Shifts to IDBI Bank, OFS Becomes Stopgap
While OFS remains the near-term focus, the Centre is concurrently prioritising the strategic sale of IDBI Bank. Delays in several high-profile privatisation efforts, such as BPCL and Shipping Corporation, have prompted a renewed emphasis on market-driven stake sales like OFS to meet revenue targets without sacrificing market confidence.
The FY24–25 fiscal year recorded ₹74,016.68 crore in dividend receipts from CPSEs, providing a strong fiscal cushion. The Centre now seeks to complement those inflows with timely equity dilution in large and mid-sized PSUs.
Highlights:
IDBI Bank strategic sale remains top priority for the government.
OFS seen as reliable, less contentious mechanism to raise capital.
FY25 saw record dividend inflow from CPSEs, led by Coal India.
Government Stakes in Focused PSUs: Scope for Monetisation
The government’s current holdings in the targeted PSUs are:
Coal India: 63.13%
LIC: 96.50%
RVNL: 72.84%
GRSE: 74.50%
With most of these above 60%, the government has room for minority stake dilution while maintaining controlling interest. This aligns with its evolving disinvestment policy of retaining core ownership in strategic assets while unlocking value for shareholders and boosting liquidity.
Highlights:
Government has ample headroom to execute OFS without losing control.
Stake sales will be market-timed, based on valuation and investor sentiment.
FY26 disinvestment target to be supported by staggered OFS rollout across quarters.
