Shares of Indian Railway Catering & Tourism Corporation (IRCTC) crashed over 5% on Thursday as the government’s offer for sale (OFS) to sell a 5% stake in the company began. At 1.16 pm, the IRCTC stock was trading at Rs 694, down by Rs 40.90 or 5.57% from previous close. The OFS began on Thursday morning and will close on Friday at market close. The stake sale is likely to fetch Rs 2,720 crore for the government.
The floor price of the OFS has been fixed at Rs 680 per share, a discount of 7% to Wednesday’s closing price of Rs 734.90 per share. The promoter Government of India seeks to sell 40,000,000 shares of the country, which constitute 5% stake in the India’s Railway’s ticketing and catering arm.
“The President of India, acting through and represented by the Railways, Government of India is the promoter of Indian Railway Catering and Tourism Corporation Ltd proposes to sell up to 2,00,00,000 Equity Shares of the Company, (representing 2.5% of the total issued and paid up equity share capital of the Company) (“Base Offer Size”), on December 15, 2022, (“T day”) (for non-Retail Investors only) and on December 16,2022 (“T+1 day”) (for Retail Investors and for non-Retail Investors who choose to carry forward their unallotted bids) with an option to additionally sell 2,00,00,000 Equity Shares (representing 2.5% of the total issued and paid up equity share capital of the Company) (the “Oversubscription Option”, and in the event that the Oversubscription Option is exercised, the Equity Shares forming part of the Base Offer Size and the Oversubscription Option will represent 5o/oof the total issued and paid up equity share capital of the Company, i.e. 4,00,00,000 Equity Shares,” an IRCTC exchange filing read.
Only non-retail investors are allowed to place bids on Thursday, December 15, 2022. Retail investors will be allowed to place bids on Friday, the last day of the offer.
A minimum of 25%o of the offered shares are reserved for institutional investors like mutual funds and insurance companies. The unsubscribed portion of mutual funds and insurance companies will be available to other bidders in the non-retail category, as per IRCTC OFS norms. As much as 10% of the OFS is reserved for retail investors.
Axis CapitalLimited, Citigroup, Goldman Sachs, JM Financial will carry out the OFS on behalf of the company.
The IRCTC stock has been rangebound for the last 16 weeks.
In the second quarter of FY23, the company posted a 42.5% growth in net profit to Rs 226 crore compared to Rs 158.50 crore in the year-ago period. Revenue from operations increased 99% to Rs 805.80 crore from Rs 404.90 crore in the second quarter of FY22.
