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In February 2026, the Indian government decided to sell a 5% stake in Bharat Heavy Electricals Limited (BHEL), one of India’s biggest and most well-known public sector companies. This type of sale is called an Offer for Sale, or OFS - a process where the government sells some of its existing shares in a company to ordinary investors and big financial institutions through the stock exchange. BHEL is a giant in India’s power and engineering world. It builds turbines, transformers, boilers, and heavy equipment used in power plants across the country. In fact, BHEL is responsible for about 55% of India’s total installed power generation capacity - more than half the country’s power infrastructure has BHEL equipment in it. How Much Did the Government Sell? The government started by offering a base stake of 3%, which equals about 10.44 crore shares. It also kept an extra 2% (around 6.96 crore shares) ready to sell if demand was high - this extra option is called a ‘green-shoe option.’ Together, this could mean selling up to 5% of BHEL, or about 17.41 crore shares in total.
What Was the Price?
The floor price (the minimum price at which shares could be bought) was set at ₹254 per share. This was about 8% lower than BHEL’s market price of around ₹276 before the sale was announced. By offering shares at a discount, the government made the deal more attractive to buyers. If all 5% was sold at this price, the government expected to collect around ₹4,422 crore.
Who Could Buy?
The sale ran over two days. On Day 1 (February 11), only large institutional investors such as mutual funds, insurance companies, and big investors (called HNIs) could place bids. On Day 2 (February 12), regular retail investors - everyday people like you and me - were allowed to participate. A portion of shares (at least 10% of the offer) was specifically reserved for retail investors, and BHEL employees also got a small reserved quota.
How Did Investors React?
The market’s first reaction was not very positive. When the stake sale was announced, BHEL’s share price dropped by about 5.5% to ₹261 on the first day. This is a common reaction - when more shares flood the market, existing shareholders worry about dilution and a lower share price. However, the actual bidding told a much better story. On Day 1, institutional investors placed bids for 22.07 crore shares at an average price of about ₹256, worth over ₹5,650 crore in total. This strong demand meant the government exercised the green-shoe option, going ahead with selling the full 5% stake. By the time Day 2 (retail investor day) ended, the issue was subscribed 1.34 times - meaning investors wanted to buy 34% more shares than the government was offering. BHEL’s share price eventually stabilised, closing at around ₹260.
Why Is the Government Selling?
This stake sale is part of the government’s larger plan called disinvestment - a strategy where the government slowly reduces its ownership in public sector companies and raises money for the national budget. In the Union Budget 2026–27, the government has set an ambitious target of ₹80,000 crore from disinvestment and asset sales. But the government fell short in FY26, collecting only about ₹33,837 crore against a budgeted target of ₹47,000 crore. The BHEL sale added ₹4,400 crore to this year’s collections, bringing the total so far in FY26 to about ₹13,168 crore. Even after this sale, the government still holds 58.17% in BHEL, well above the minimum required stake.
How Is BHEL Performing as a Company?
The timing of this stake sale coincided with a strong quarterly performance from BHEL. In its third quarter results (October to December 2025), BHEL reported a 16% rise in revenue, reaching ₹8,473 crore compared to ₹7,277 crore in the same period last year. More impressively, its profit jumped nearly three times - from ₹135 crore to ₹390 crore. This growth was driven by strong orders in power equipment, BHEL’s biggest business segment, which grew 13% to ₹6,322 crore. Separately, BHEL also received a new order worth ₹2,800 crore for a coal-to-chemicals project in Odisha, showing that its order book remains healthy.
Why It’s Attractive
The 8% discount to the market price made the OFS attractive for both big and small investors. Buying shares below the market price gives an immediate advantage. Additionally, more public ownership means better trading volumes and price transparency for BHEL on the stock exchange. The OFS also followed strict SEBI guidelines, making it a safe and well-regulated process.
What to Watch Out For
The biggest downside of an OFS is that all the money goes to the government, not to BHEL itself. This means BHEL doesn’t get any fresh funds for expansion or new projects. There is also the usual risk of short-term selling pressure when a large number of new shares enter the market. Since BHEL is a government-owned company, its future also depends heavily on government policies, spending on infrastructure, and power demand across India.
Conclusion
The BHEL OFS was a well-executed disinvestment that benefited both the government and investors. Subscribed 1.34 times, it showed that market confidence in BHEL remains solid, backed by strong financials and a healthy order book. For retail investors, the discounted floor price was a meaningful entry opportunity into a fundamentally strong public sector company. For the government, it was another step in its ongoing effort to raise funds through responsible disinvestment while retaining majority control. Whether you’re a first-time investor or a seasoned market watcher, the BHEL stake sale offers a clear window into how India manages its vast portfolio of public sector enterprises.