IRCTC tumbles 8% as government's 20% stake sale through OFS begins

• The offer for sale has opened for non-retail investors today.
  
• The government is planning to sell up to 20% stake in the company.
  
• The floor price has been set at ₹1367, which is at a 16% discount to the last closing price on December 9.

The shares of Indian Railway Catering and Tourism Corp (IRCTC) plunged over 8% in morning trade as the two-day offer for sale (OFS) gets underway. The government is planning to sell up to 20% stake in the company. The OFS has opened for non-retail investors today. Floor price has been set at ₹1367, which is at a 16% discount to the last closing price on December 9.


The promoter proposes to sell up to 2,40,00,000 equity shares of IRCTC, representing up to 15% stake, with an option to additionally sell 80,00,000 shares, representing 5% of the total issued and paid up equity share capital, the company said in a regulatory filing.

"Offer for Sale in IRCTC opens tomorrow for Non Retail investors. Day 2 for retail investors. Govt. would divest 15 per cent equity with a 5 per cent green shoe option," Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said in a tweet.

Shares of IRCTC on Wednesday closed at Rs 1,618.05 apiece on the BSE, down 1.55 per cent from its previous close.

In all, the promoter Government of India will sell 3.2 crore shares, which is expected to garner Rs 4,374 crore for the exchequer starved of funds due to the COVID-19 crisis.

IRCTC OFS will help the government inch forward in meeting the Rs 2.10 lakh crore disinvestment target. Of this, Rs 1.20 lakh crore will come from disinvestment of public sector undertakings and another Rs 90,000 crore from stake sale in financial institutions.

The government currently holds 87.40 per cent stake in IRCTC. To meet Sebi's public holding norm, the government has to lower its stake in the company to 75 per cent.

IRCTC, the only entity authorised by Indian Railways to provide catering services, online railway tickets and packaged drinking water at railway stations and trains in India, was listed on the stock exchanges in October 2019. The company had raised Rs 645 crore through the IPO.

The Union Cabinet had in April 2017 approved listing of five railway companies. While four of them -- IRCON International Ltd, RITES Ltd, Rail Vikas Nigam Ltd and IRTC -- have already been listed, IRFC is likely to be put on the block this fiscal.


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