Rail Vikas Nigam’s Stock Falls On Government’s Stake Sale Plan

Shares of Rail Vikas Nigam Ltd. fell on the government's plan to sell 15% stake in the rail construction services provider through an offer for sale.

The initial plan would be to sell 10% of the total equity or 20.85 crore shares, according to an exchange filing released Tuesday evening. The government will have a greenshoe option to sell another 5% of the total equity or 10.4 crore shares.

The floor price of the OFS was set at Rs 27.5 apiece, a 9.5% discount to the company's closing price on Tuesday.

As of December, the government held an 87.84% stake in the company, which on full 15% stake sale will fall to 72.84%. On the sale of the entire 15% equity at the floor price, the government may garner Rs 860 crore.

The offer for sale opened for non-retail investors on March 24 and will open for retail investors on March 25.

Shares of Rail Vikas Nigam fell as much as 8.7% in early trade on Wednesday to Rs 27.8 apiece—the lowest in two months. All the three analysts tracking the company recommend a 'buy', according to Bloomberg data. The average 12-month consensus price target implies an upside of 29.7%.