BHEL Shares Plunge After Government Announces Up to 5% Stake Sale via OFS

Shares of Bharat Heavy Electricals Limited (BHEL) fell sharply on Wednesday after the Government of India announced a stake sale through an Offer for Sale (OFS), triggering heavy selling across the counter. The stock dropped over 6% in early trade, hitting intraday lows and wiping out recent gains, despite the company reporting strong Q3 FY26 financial results only weeks ago.

The decline reflects investor caution around large government divestments, especially when offered at a discount, and fears of increased supply pressure in the market.

Government OFS Triggers BHEL Share Price Fall

The government formally launched the OFS on 11 February 2026, aiming to divest up to 5% stake in BHEL as part of its broader PSU disinvestment plan.

Key details of the OFS:

• Base offer: 3% stake (around 10.44 crore shares)
• Green-shoe option: Additional 2% stake (around 6.96 crore shares)
• Total potential divestment: 5%
• Floor price: INR 254 per share
• Estimated base deal size: ~INR 4,422 crore
• Total potential value (if 5% sold): Over INR 7,000 crore, based on pre-dip market capitalisation near INR 1.4 lakh crore

Trading for anchor investors took place on 10 February, while the OFS opened for institutional and retail investors on 11 February from 9:15 AM to 3:30 PM IST, with settlement expected on a T+1 basis.

The floor price was set at a discount to the previous closing price, which immediately impacted market sentiment. During the session, BHEL shares fell to as low as INR 231, with heavy volumes seen as both retail and institutional investors reacted to the announcement. By midday, the stock was hovering around INR 235-INR 260, showing high volatility and weak sentiment.

Market participants cited supply pressure, discounted pricing, and dilution concerns as key reasons behind the sharp fall. Even though the government will still retain a majority stake (above 60%) after the sale, the sudden increase in free float has created short-term uncertainty.

BHEL's Strong Q3 FY26 Results Overshadowed by Stake Sale News

The sell-off comes despite BHEL delivering a strong Q3 FY26 financial performance, which had earlier supported positive sentiment around the stock.

In the quarter ended 31 December 2025, BHEL reported:

• Consolidated net profit: INR 390 crore (up nearly 190% year-on-year)
• Revenue: INR 8,473 crore (16% YoY growth)
• Standalone profit: INR 382 crore (up from INR 125 crore last year)
• Improved EBITDA margins, supported by cost control and better execution

The growth was driven by strong performance in power, defence, and infrastructure projects, along with steady order inflows. BHEL’s order book is at record levels, supported by wins in thermal power, renewable energy, and industrial projects, with an estimated pipeline of around INR 80,000 crore.

Financially, the company remains debt-free, with improving cash flows and stable operations, positioning it well for long-term growth. However, markets have temporarily ignored these positives due to the OFS-driven selling pressure.

Timeline, Current Status and What Investors Should Watch

Key timeline:

• 10 February 2026: Government approves OFS via DIPAM
• 10 February: Anchor bidding completed
• 11 February: OFS opens for investors (9:15 AM – 3:30 PM IST)
• 13 February: Expected share credit if oversubscribed

Current status:
BHEL shares remain volatile, with trading volumes elevated and investor sentiment cautious. Institutional investors (FIIs and DIIs) are closely watching subscription data, while retail participation is being tested by market uncertainty.

Investor Takeaways

The BHEL OFS is part of the government’s broader goal to raise INR 50,000 crore through PSU divestments in FY26. For BHEL, the move increases liquidity and free float but creates short-term pressure on the share price.

Key points for investors:

• Short-term volatility is likely to continue
• Q3 results confirm strong operational performance
• Long-term fundamentals remain stable
• Subscription levels will be a key indicator of market confidence

Analysts believe that if the OFS is well subscribed, BHEL shares could gradually stabilise and move back towards the INR 260-INR 280 range, supported by earnings growth and a strong order book. For now, the stock remains under pressure, with the stake sale headline dominating market sentiment despite solid business fundamentals.