Govt PSU Stake Sales Hit 11-Year High: Which Stocks Could See More OFS Pressure?
Why Are Government PSU Stake Sales Suddenly Surging?
The government has already raised more than ₹25,490 crore through PSU stake sales in 2026—the highest through the Offer for Sale (OFS) route in 11 years. But could this be just the beginning?
With crude oil prices rising, subsidy bills increasing and fiscal pressure mounting, the government has accelerated its disinvestment programme much earlier than usual. For investors, the bigger question is which PSU stocks could be next in line for an OFS.
The latest PSU stake sales also come as several public sector companies still have government ownership well above the mandatory 75% ceiling, leaving room for additional stake dilution in the coming months.
Govt PSU Stake Raises ₹25,490 Crore
The government has raised around ₹25,491 crore by selling stakes in eight listed PSUs through the Offer for Sale (OFS) route in 2026.
This marks the highest PSU stake sale via OFS since 2015, when around ₹35,291 crore was mobilised through five listed companies.
According to Prime Database, 24 listed companies, including private firms, have together raised around ₹29,445 crore through OFS this year, putting 2026 close to previous record years.
The government’s aggressive pace also reflects its ambition to achieve the ₹80,000 crore disinvestment target for the current financial year.
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Recent OFS Volumes and Key Transactions
The government’s FY27 disinvestment push is evident in Q1 data. By June end, OFS proceeds (minority stake sales) reached roughly ₹16,480 crore in just five PSUs (as per DIPAM) – all achieved in May–June 2026. (If we include BHEL’s Feb sale and IRFC’s June sale, the total rises to ₹25,500cr.) For context, full-year PSU stake-sale receipts were about ₹45,300cr in FY26. The jump to FY27 has been driven by:
- Budget/Targets: FY27 targets an ambitious ₹80,000 crore through disinvestment/monetisation. Early collections (₹18,533cr by June 2026) are 23% of that goal in only two months.
- MPS Compliance: SEBI mandates ≥25% public float. Several PSU banks still have >90% government ownership (Central Bank, UCO, P&S Bank, etc.), forcing stake sales via OFS. (The govt has been coordinating sales in multiple banks to meet norms by August 2026.)
- Fiscal Needs: Funds are needed for higher subsidies and capital expenditure. Analysts note the government “front-loaded” stake sales despite subpar markets.
Monthly OFS Proceeds (2026): Early 2026 saw light sales (BHEL in Feb), but May–June saw a flurry of activity. The chart below (₹ crore per month) illustrates the pickup in OFS inflows:
Monthly OFS proceeds (₹Cr): Jan: 0 | Feb: 4400 | Mar: 0 | Apr: 0 | May: 7808 | Jun: 11048
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PSU OFS Deals – Details (2026)
Table 1 lists all completed OFS deals in FY2026 (and one planned IRFC OFS), with company, sector, stake sold (% of equity), date of OFS and proceeds (₹ crore). Proceeds and post-sale government holding are from DIPAM (except BHEL/IRFC from press reports). We cite sources for verification:
| Company | Sector | % Govt Stake Sold (base + green-shoe) | OFS Dates (2026) | Proceeds (₹ Cr) | Post-sale Gov’t Stake | Source(s) |
|---|---|---|---|---|---|---|
| BHEL (Bharat Heavy Elec.) | Heavy Machinery | 5.0% (3%+2%) | 11–12 Feb 2026 | ~4,400 | 63.17% | Press/Filing |
| IRFC (Railways Fin. Corp.) | Finance (Rail) | 2.0% (1%+1%) | 24–25 Jun 2026 | – | ~84% (pre-OFS) | OFS Filing (expected)** |
| Central Bank of India | Banking | 8.08% (4%+4%) | 22–25 May 2026 | 2,266.13 | 81.19% | DIPAM |
| Coal India Ltd. | Mining (Coal) | 2.00% (1%+1%) | 26 May 2026 | 5,542.36 | 61.13% | DIPAM |
| NHPC Ltd. | Hydro Power | 6.01% (3%+3%) | 2–3 Jun 2026 | 4,357.36 | 61.39% | DIPAM |
| NLC India Ltd. | Mining/Energy | 2.73% (2%+0.73%) | 9–10 Jun 2026 | 1,223.57 | 69.47% | DIPAM |
| GIC Re (General Ins. Corp.) | Insurance | 5.00% (2%+3%) | 16–17 Jun 2026 | 3,090.47 | 77.40% | DIPAM |
Notes: (1) The IRFC OFS (June 24–25) was reported as 2% base (26.13cr shares) at ₹91 floor; final proceeds are expected ₹2,300–2,500cr (not yet confirmed) if fully subscribed. (2) “Sector” is given loosely: e.g. NLC is a thermal power co., etc. (3) Government shareholding post-sale is from the cited source.
OFS Vulnerability – Key Metrics
Some PSU stocks remain “vulnerable” to more OFS selling. Table 2 ranks candidates by their potential pressure, based on (a) remaining government stake, (b) recent OFS size, and (c) trading liquidity (proxy: average volumes). A high government stake and large planned sale (relative to float/volume) imply many days to sell. We estimate “days-to-sell” = (shares offered / ADV). (All figures are illustrative; actual ADV will vary.)
| PSU (Ticker) | Sector | Govt. Stake (post-2026 OFS) | Recent OFS (₹ Cr) | Approx. ADV (₹ Cr/day) | Implied days to offload recent OFS** | Dilution*** |
|---|---|---|---|---|---|---|
| IRFC (IRFC.NS) | Rail Fin. | 86%→84% | 2,400 (est.) | Low (1,500–2,000) | 40–60 days | 2.0% |
| GIC Re (GICRE.NS) | Insurance | 82.4%→77.4% | 3,090 | Low (800–1,000) | 30–40 days | 5.0% |
| Central Bank (CBI.NS) | Banking | 89.3%→81.2% | 2,266 | Low (400–500) | 40–60 days | 8.1% |
| Mazagon Dock (MAZDOCK.BO) | Defence | 84.8%→81.2% | – | Modest (500–600) | (No sale yet) | – |
| UCO Bank (UCO.NS) | Banking | 91% (public 9.1%) | – | Low (300–400) | – | – |
| Punjab & Sind Bank (PSB.NS) | Banking | 93% (public 6.2%) | – | Low (100–200) | – | – |
| IDBI Bank (IDBI.NS) | Banking | 33% (Govt)+48.5% (LIC)=81.5% | – | Low (300–400) | – | – |
| NHPC (NHPC.NS) | Power/Hydro | 67.4%→61.4% | 4,357 | Moderate (500–600) | 20–30 days | 6.0% |
Notes: ADV is estimated from recent turnover; for example IRFC’s daily trading is 50–80 million shares (₹5k–₹8k crore), implying limited room to absorb multi-thousand-crore OFSes. Dilution = stake sold / total equity (e.g. 5% of GIC’s equity was sold). PSUs still above 75% govt stake (IRFC, Central Bank, GIC, Mazagon) are most likely to see further cuts.
Why Do PSU Stocks Often Fall Before an OFS?
Market experts say this is a common pattern.
Since OFS shares are generally offered at a discount of 3% to 10%, institutional investors often sell existing holdings before participating in the discounted issue.
Market expert Ajay Bagga explains that this creates a short-term arbitrage opportunity, leading to temporary selling pressure before prices stabilise after the OFS.
Existing shareholders also experience dilution, prompting some institutional investors to reduce exposure before re-entering later at lower prices.
Why Is the Government Selling PSU Stakes So Early This Year?
Unlike previous years, the government has front-loaded its disinvestment programme.
Several factors are driving this strategy:
- Rising crude oil prices
- Higher fertiliser and LPG subsidy requirements
- Fiscal deficit management
- Need to generate non-tax revenue
- Delay in large strategic privatisation deals
With strategic disinvestment progressing slowly, PSU stake sales through OFS have become the government’s preferred fundraising route.
PSU Stocks That Could Remain Under OFS Watch
- IRFC: The government still owns a large stake in IRFC. After its recent OFS, investors will watch for any further stake sale announcements.
- GIC Re: Despite the recent 5% OFS, the government’s holding remains above the minimum public shareholding requirement, leaving room for future stake dilution.
- Central Bank of India: The government continues to hold over 80% of the bank. More stake sales may be needed to increase public shareholding.
- Mazagon Dock Shipbuilders: The defence PSU still has high government ownership, making it a potential candidate for future stake sales if required.
- UCO Bank: With government ownership above 90%, the bank remains one of the PSUs that may need to reduce its stake to meet public float norms.
- Punjab & Sind Bank: The government’s holding is also well above regulatory requirements, keeping the stock on the OFS watchlist.
- IDBI Bank: The government and LIC together own more than 80% of the bank. While privatization plans remain under discussion, there is no official announcement of an OFS at present.
- NHPC: The government recently reduced its stake through an OFS. Although its holding is now lower, investors will continue to watch for any further disinvestment.
Expert View on Future Stake Sales
Experts believe the government may continue using the OFS route throughout FY2027 to meet its ambitious ₹80,000 crore disinvestment target.
Some analysts, however, argue that stake sales should follow a more valuation-driven approach instead of taking place during periods of weak market sentiment.
Ajay Bagga also believes sectors such as defence PSUs and profitable PSU banks offer room for gradual stake reduction while allowing the government to retain management control.
