IRCTC gains as Govt mulls stake sale via OFS

Indian Railway Catering and Tourism Corporation (IRCTC) rose 0.51% to Rs 1353.55 after the Government of India (GoI) announced plan to pare its stake in the company.

As on 30 June 2020, GoI held 87.40% stake in IRCTC. To meet Sebi's public holding norm, the government has to lower its stake in the company to 75%.

The Department for Investment and Public Asset Management (DIPAM) has issued an official Request for Proposal (RFO) inviting bids from merchant bankers for managing the sale process.

"The GoI intends to disinvest a part of the paid up equity capital of IRCTC out of its shareholding through 'Offer for Sale' (OFS) method of shares by promoters through the stock exchanges as per Securities and Exchange Board of India (SEBI) Rules and Regulations," DIPAM said in a statement.

The government is also considering allotting shares to eligible and willing employees of IRCTC at a discount to the issue, or discovered price (lowest cut off price), subsequent to completion of the OFS.

"The percentage and extent shall be decided in due course," the government said in the bid document.

GoI has sought bids from merchant bankers between 4th and 10th of September 2020 and they will be opened on 11 September 2020. A pre-bid meeting will be held on 3 September 2020.

Shares of IRCTC fell 2.6% in the past three sessions. The stock was listed at Rs 644 each in October last year, more than double the IPO price of Rs 320 per share. The government raised Rs 645 crore by selling 12.6% stake at the time of the IPO.

IRCTC, a Mini Ratna public sector enterprise under the administrative control of Ministry of Railways, is the sole entity authorized by Indian Railways (IR) to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India. IRCTC operates in four business segments, namely, internet ticketing, catering, packaged drinking water and travel & tourism.

The company reported a 79.4% jump in net profit to Rs 150.61 crore on a 17.9% rise in net sales to Rs 586.89 crore in Q4 March 2020 over Q4 March 2019.

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