IRCTC shares tank over 10% as govt begins to offload 20% stake via OFS

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) plunged more than 10 per cent on Thursday after the government launched a share sale to offload its 20 per cent stake.

The stock ended at Rs 1,452, down 10.3 per cent. Analysts said the higher-than-excepted paper supply by the government weighed on sentiment.

Meanwhile, the 32-million share offering received bids for nearly 43 million shares. Another 3.2 million shares meant for retail investors will be auctioned on Friday.

Most of the bids came in at Rs 1,392. The centre had set the floor price for the offer for sale at Rs 1,367, a discount of 15 per cent to Wednesday’s close.

Through the OFS, the government will be able to mop up around Rs 4,400 crore, which will go towards 2020-21 disinvestment kitty.

Currently, the government holds 87.4 per cent stake in IRCTC. Following the share sale, the stake will drop to 67.4 per cent. Market players were hoping the government will pare its holding only to the extent of 75 per cent.

IRCTC is the authorized entity to provide catering services, online railway tickets and packaged drinking water for Indian Railways. The company was listed in October 2019, and the government raised Rs 645 crore through the IPO by issuing shares at Rs 320 apiece.

Four railway companies have been listed so far -IRCON, RITES, Rail Vikas Nigam and IRCTC.  ndian Railway Finance Corporation’s IPO is expected to hit the market soon.