Offer for Sale (OFS) in India: Floor Price, Retail Discount & Bidding Rules Explained
An Offer for Sale (OFS) is a streamlined stock exchange bidding mechanism introduced by SEBI that allows company promoters, promoter group entities, and large non-promoter institutional shareholders (holding at least 10% of share capital) to dilute their stake in listed companies directly to public investors through a transparent secondary bidding window.
1. Why Do Promoters Launch an OFS?
- Complying with Minimum Public Shareholding (MPS): SEBI mandates that every listed company must maintain at least 25% public float. Promoters exceeding 75% equity ownership frequently launch an OFS to reduce their holding.
- Government Divestment: The Government of India routinely utilizes OFS to divest stakes in Central Public Sector Enterprises (CPSEs) like Coal India, IRCTC, HAL, and RVNL to meet disinvestment targets.
- Zero New Equity Dilution: Unlike a fresh issue IPO, an OFS involves transferring existing shares; the total equity share count of the company remains unchanged.
2. OFS Two-Day Bidding Timeline (T and T+1)
Unlike IPOs which stay open for 3 days, an OFS operates rapidly over two consecutive trading days during standard market hours (9:15 AM to 3:30 PM):
- T Day (Non-Retail Bidding): Opens exclusively for institutional investors (QIBs) and non-retail corporate bidders. Bidders place orders indicating quantity and bid price at or above the Floor Price.
- T+1 Day (Retail Bidding): Opens exclusively for individual retail investors (bidding up to ₹2,00,000). Retail investors can assess institutional subscription numbers from T-day before deciding to bid!
3. Floor Price & Retail Discounts
The promoter announces the Floor Price (the minimum price below which no bids are accepted) one day prior to issue opening, usually at a 3% to 10% discount to the prevailing market closing price.
Retail Discount: In many government and public sector OFS issues, sellers provide an additional 5% discount exclusively for retail investors, either deducted directly from the floor price or credited at the cut-off allotment price.
4. Mandatory Retail Reservation (25% Quota)
SEBI rules mandate that a minimum of 25% of the total OFS offer size must be reserved for retail investors. If the retail portion remains undersubscribed, the unsubscribed shares cannot be allotted to non-retail bidders.
5. How to Bid in an OFS (Zero Paperwork)
- Check upcoming and live OFS announcements on our Offer for Sale (OFS) Portal.
- Log in to your broker's web or mobile terminal (Zerodha, AngelOne, Upstox, Groww, ICICI Direct).
- Navigate to the OFS section under 'Orders' or 'Corporate Actions'.
- Select the OFS, choose between Cut-off Price or enter a specific bid price above the Floor Price.
- Ensure 100% upfront cash margin is available in your trading account. The exchange debits funds upon successful allotment, and allotted shares are credited to your demat on T+1 settlement!
6. OFS vs IPO: Core Differences
| Feature | Offer for Sale (OFS) | Initial Public Offering (IPO) |
|---|---|---|
| Company Status | Already listed and trading on stock exchanges. | Unlisted private entity debuting on exchanges. |
| Duration | 2 working days (T & T+1). | 3 to 5 working days. |
| Allotment Cycle | Instant T+1 day settlement. | T+3 day settlement. |
| Capital Proceeds | Go directly to selling promoter/shareholder. | Go to company (fresh issue) and selling shareholders (OFS portion). |
| Price Discovery | Exchange order book bidding based on Floor Price. | Book building within a price band. |
Check live floor prices, promoter holdings, and historical divestments on our Offer for Sale (OFS) Dashboard.
Frequently Asked Questions
Can retail investors bid on Day 1 (T Day) of an OFS?
No. Day 1 (T Day) is reserved exclusively for non-retail and institutional investors. Retail investors can place bids only on Day 2 (T+1 Day), allowing small investors to review non-retail subscription demand before committing capital.
Is full cash margin required to bid in an OFS?
Yes. Unlike IPOs where funds are blocked via UPI ASBA, bidding in an OFS requires 100% upfront cash margin available in your broker trading balance at the time of order placement.
What is the difference between Floor Price and Cut-off Price in OFS?
The Floor Price is the absolute minimum price set by the seller below which no bids are entertained. The Cut-off Price is the lowest price at which the offer is fully subscribed. Retail investors selecting 'Cut-off' are allotted shares at the cleared clearing price.
Last updated 2026-10-25. Information only, not investment advice.