IRFC slumps 6% as govt eyes 11% stake sale via OFS, stock up 49% in 2023

Shares of state run financier Indian Railway Finance Corporation (IRFC) retreated 5.7 per cent in Thursday's trade, a day after scaling an all-time high of Rs 52.7, on reports that the government is looking to partially sell its stake in the firm via on offer for sale (OFS). 

The stock touched an intra-day low of Rs 48.29 on the BSE, eroding an 8 per cent gain from the record high level of Wednesday. On a year-to-date basis, the stock is up 49 per cent (against today's low). In comparison, the BSE Sensex has gained 8 per cent during this period.

News agency Reuters reported the government will aim to sell up to 11 per cent stake in IRFC in multiple tranches, but it is yet to decide the exact quantum of sale. 

 

"We are assessing investor appetite before deciding on the quantum of dilution," an official was quoted by PTI in a separate report.

The government owns 86.36 per cent of the Indian Railways' funding arm. The stake sale is being planned to help the government meet its divestment targets for the year, Reuters report said. 

The sale would also allow the government to adher to SEBI-mandated minimum public shareholding norms, which require that public companies maintain at least 25 per cent public shareholding.

To make the central public sector enterprise compliant with this norm, the government has to dilute 11.36 per cent stake in IRFC.

The government had listed IRFC in January 2021. The share sale consisted of fresh issue of shares by the company and an additional 4.55 per cent stake dilution by the government.

IRFC reported a 6 per cent year-on-year fall in its net profit to Rs 1,557 crore in the quarter ended June. The total revenue from operations rose 18.7 per cent on-year to Rs 6,679.2 crore during the quarter.