The retail portion of the Indian Railway Finance Corporation (IRFC) Offer for Sale (OFS) opens today, June 25, allowing individual investors to participate in the government's disinvestment drive. As per The Economic Times, retail investors can subscribe through the corporate actions or OFS section of their trading platform, with the floor price set at ₹91 per share. The retail window follows the successful non-retail portion that was oversubscribed 1.86 times on Wednesday, prompting the government to exercise the green shoe option adding 11.24 crore shares to the base issue of 13.07 crore shares. The structure includes separate windows for non-retail investors on Wednesday and for retail investors, employees and carried-forward bids on Thursday, with 25,000 equity shares reserved for employees as part of the offer. Out of the total 26.13 crore shares representing a 2% stake, 2.43 crore shares will be available for retail investors, while the remaining portion is allocated to institutional investors.
IRFC shares closed at ₹98.69 on BSE, down 2.16% and ₹98.67 on NSE, down 2.21% on Thursday, as reported by Upstox. The stock had earlier declined 6.8% on Wednesday to close near the OFS price at ₹91.93, as reported by CNBC TV18. The stock has fallen 26.9% this year so far and is down nearly 60% from its record high of ₹229 that it hit in 2024. According to ET Now, the stock had earlier declined more than 5% in early trade on Wednesday, opening at ₹94 on the National Stock Exchange (NSE) and slipping further to a low of ₹93.40. The stock was trading 5% lower at ₹93.70 as of 9:45 AM, marking the second consecutive session of losses for IRFC shares. As per CNBC TV18, more than 16 million shares of the Navratna PSU changed hands during the first 30 minutes of trading. Rajesh Palviya of Axis Securities noted that investor sentiment around IRFC has been subdued for a long time, and today's decline was primarily driven by the OFS announcement. The floor price of ₹91 per share implies a discount of 7.79% from Tuesday's closing price of ₹98.69 on BSE.
The IRFC OFS includes over 26.13 crore shares representing a 2% stake in IRFC with an additional 1% stake via greenshoe option. At the floor price of ₹91 per share, the stake sale will fetch over ₹2,300 crore to the exchequer. In the current fiscal year, the government has sold minority stakes in five central public sector enterprises, banks and insurance companies, taking the total disinvestment proceeds to ₹16,480 crore so far. This includes ₹5,542 crore from Coal India, ₹4,357 crore from NHPC, ₹3,090 crore from GIC, ₹2,266 crore from Central Bank of India and ₹1,223 crore from NLC India. The proposed stake sale forms part of the government's broader disinvestment strategy aimed at raising resources through market-based offerings in listed public sector companies. The government's divestment target for FY27 is set at ₹80,000 crore, with Finance Minister Nirmala Sitharaman indicating there would be a lot more divestment going forward.
At the end of the March quarter, the government held 84.65% stake in IRFC while retail and non-retail shareholders held 9.68% and 1.02% stake, respectively, as per data available on stock exchanges. The government's divestment drive continues to gain momentum, with the IRFC stake sale coming after recent OFS in Coal India, Central Bank of India, NLC India, NHPC and General Insurance Corporation of India (GIC). The government exercised the greenshoe option in all these offer for sales announced this year, on the back of healthy demand. Earlier this week, sources told CNBC TV18 that the Centre is also planning to launch an OFS in Cochin Shipyard. IRFC, a Navratna Central Public Sector Enterprise under the Ministry of Railways, serves as the dedicated financing arm of Indian Railways and plays a key role in funding railway infrastructure projects and rolling stock acquisitions.
Rajesh Palviya of Axis Securities provided a cautious outlook on IRFC, stating that the stock was technically already weak with a series of lower highs and lower lows, indicating a bearish trend. "IRFC stock has not delivered meaningful returns over the past year, and the overall structure remains weak," he said. At this stage, he would suggest retail investors to start away from the OFS and also from the stock as "there are no strong positive triggers visible" and "I do not expect IRFC to generate meaningful returns in the near term." Despite the decline, IRFC continues to enjoy strong retail interest with over 50 lakh small shareholders. The government currently holds an 84.65% stake in the railway sector enterprise, which is well above the Minimum Shareholding norms of 75%. Among public shareholders, Mutual Funds have a 0.27% stake, while Life Insurance Corporation of India owns a 2.54% stake.
