Mazagon Dock Shares Tank 6% As Government Offloads Equity Under OFS

Mazagon Dock Shipbuilders Ltd.'s share price tanked 6.4%, its sharpest fall since mid-February, after the government began trimming its equity holding under an offer for sale of shares. The share sale is taking place for non-retail investors today.

While placing their bids, non-retail investors can indicate their willingness to carry forward their un-allotted bids to T+1 day (April 7) for allocation to them in the unsubscribed portion of the retail category.

On Monday, retail investors, employees, and non-retail investors will be allowed to bid for shares under the OFS.

The base offer comprises the sale of up to 1.14 crore shares, representing 2.83% of the company's total equity. Additionally, the government may offload 80.67 lakh more shares, or a 2% stake, through an oversubscription option. If fully exercised, the total stake sale will amount to 4.83%.

"Additionally, 50,000 shares (0.26% of the total offer) may be offered to eligible employees, subject to necessary approvals," the filing noted.

The floor price for the sale has been set at Rs 2,525 per share, which marks a discount of nearly 8% to the previous closing price.

The Union government holds an 84.83% stake in the shipbuilding company as of the December quarter, according to data available on the BSE.

Mazagon Dock share price fell 6.4% to Rs 2,561.25 apiece. The scrip was trading 6.2% lower at 9:25 a.m. The benchmark Nifty 50 was down 0.5%.

The stock has risen 134% in the last 12 months and 15% on a year-to-date basis. The total traded volume so far in the day stood at 3.8 times its 30-day average. The relative strength index was at 56.

Three out of the five analysts tracking Mazagon Dock have a 'buy' rating on the stock, one recommends 'hold' and another suggests 'sell', according to Bloomberg data. The 12-month analysts' price targets imply a potential downside of 14%.