IRFC shares plunge nearly 9% as government plans to sell part of its holdings in PSU

IRFC share price NSE: Shares of Indian Railway Finance Corp (IRFC) slipped as much as 8.8 per cent to Rs 46.7 apiece on Thursday (August 17), a day after the government announced it was planning to sell over 11 per cent stake in the state-owned company via an offer for sale (OFS) in the current fiscal (FY24).

IRFC shares opened at Rs 50 on the NSE and slipped as much as nearly 9 per cent. The counter finished at Rs 47.45, down by Rs 3.8, or 7.41 per cent on the NSE. Commenting on the stock, Sumeet Bagadia of Choice Broking said the stock may witness profit booking and a corrective move from current levels. The stock will trade in a narrow range of Rs 52 and Rs 47.

The government currently holds an 86.36 per cent stake in the financing arm of the Indian Railways. According to a PTI report, a government official said an inter-ministerial group (IMG) comprising senior officers from the Department of Investment and Public Asset Management (DIPAM) and the Railways Ministry had started consultations to decide on the quantum of stake dilution.

To make the central public sector enterprise compliant with Sebi's minimum public shareholding (MPS) norm, the government has to dilute its 11.36 per cent stake in IRFC. As per MPS norm, a listed entity must have a minimum public float of 25 per cent within five years of listing.

"We are assessing investor appetite before deciding on the quantum of dilution," the official told PTI. At the current market price, a sale of 11.36 per cent would fetch the government around Rs 7,600 crore. The share sale consisted of a fresh issue of shares by the company and an additional 4.55 per cent stake dilution by the government.

IRFC share price history

IRFC shares hit their lifetime high of Rs 52.70 in early trade on Wednesday, August 16, 2023. The share price has risen over 50 per cent this month. (July 17, 2023) as per Trendlyne data. The IRFC stock was listed on stock exchanges in January 2021. IRFC reported a net profit of Rs 1,557 crore in the quarter ended June, down 6 per cent from 1,660 crore registered in the corresponding quarter last fiscal.

(With PTI inputs)

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