If you have been tracking the “railway rally” on Dalal Street, here is a big update. The Government of India is moving to dilute its stake in the Indian Railway Finance Corporation (IRFC).
The much-anticipated Offer for Sale (OFS) officially kicks off this week, offering a chance for both big institutional players and small-time retail investors to grab a piece of this railway heavyweight.
What’s on the Table?
The government, which currently holds a massive 86.36% stake in IRFC, is looking to offload up to 4% of the company. Here is a quick breakdown of how the deal looks:
- Base Offer: 2% stake (approx. 26.14 crore shares).
- Green Shoe Option: An additional 2% if demand is high (another 26.14 crore shares).
- Floor Price: Fixed at ₹104 per share.
- Total Potential Mop-up: Roughly ₹5,430 crore if the full 4% is sold.
The floor price of ₹104 comes at a slight discount to the recent market price, which has been hovering around the 109–110 rupee range. This “discount” is a standard move to attract investors during an OFS.
Why is the Government Selling?
It’s not because they’ve lost faith in the railways. In fact, it’s mostly about rules and regulations. According to SEBI norms, every listed company must have at least 25% public shareholding (known as the Minimum Public Shareholding or MPS rule). Since the government still owns over 86%, they have a long way to go to bring that down to 75%. This OFS is a step in that direction.
Additionally, with the Union Budget 2026-27 setting an ambitious 80,000 crore disinvestment target, selling stakes in profitable PSUs like IRFC helps the government fill its coffers for infrastructure spending.
The Market Reaction
The news of an OFS usually puts a little pressure on the share price in the short term, as the market prepares for a fresh “supply” of shares. IRFC’s stock dipped about 2% following the announcement, closing near 109 rs.
However, long-term fans of the stock point to IRFC’s solid fundamentals. As the dedicated funding arm of the Indian Railways, it enjoys a “AAA” credit rating and recently reported a 10.5% jump in net profit for the December quarter.
