Govt to pare 5% stake in IRCTC to raise Rs 2,720 crore via OFS; stock tanks ~6%

On Thursday and Friday, the central government will offload up to 5% of its stake in the Indian Railway Catering and Tourism Corporation (IRCTC) through an offer for sale (OFS) on the exchanges.

The share sale has a floor price of Rs 680 per share, which is 7.4% lower than the company’s closing price of Rs 734 on Wednesday.

The stake sale will raise nearly Rs 2,720 crore, providing some relief to the government as it strives to meet its disinvestment target of Rs 65,000 crore for the current fiscal year ending March 2023.

The proposed share sale will include up to 20 million IRCTC equity shares, representing 2.5% of the total issued and paid-up equity share capital, with the option to sell an additional 20 million shares.

A minimum of 25% of the shares in OFS will be reserved for mutual funds and insurance companies, with the remaining 10% reserved for retail investors.

For non-retail investors, OFS will open on Thursday. While retail investors will be able to bid on shares on Friday.

The number of shares being offered in the OFS is up to 0.5% of the firm’s total paid-up equity share capital.

Following this development, IRCTC was trading 5.35% lower at Rs695.40 against its previous closing of Rs734.70 on the BSE. The scrip opened at Rs698 and touched an intraday high and low of Rs702.75 and Rs694.40 respectively.