PremiumIndian Railways catering services provider, IRCTC shares nosedived on Thursday as the government's offer for sale begins for non-retail investors. The Centre has announced to offload of a 5% stake through OFS. A total of 4 crore equity shares will be offered for sale to investors. Following this, IRCTC shares tumbled by more than 5%. The stock currently traded near its day's low.
At around 10.11 am, IRCTC shares performed at ₹700.45 apiece down by ₹34.25 or 4.66%. The stock was near its day's low of ₹696.70 apiece. Its market valuation is around ₹56,076 crore.
On the previous day, IRCTC shares stood at ₹734.70 apiece on the exchange.
As per the regulatory filing, under the base offer, the government is offering 2 crore equity shares for sale to non-retail investors on December 15 -- representing a 2.5% stake in the company. While it will offer additional 2 crore equity shares or 2.5% in IRCTC for sale to retail investors.
Thereby, overall, the Centre will offload a 5% stake or 4 crore equity shares in IRCTC.
The offer for sale is carried on both BSE and NSE.
Axis Capital, Citigroup Markets India, and JM Financial Institutional Securities are the brokers for the government to carry the OFS.
The government has set a floor price of ₹680 per share which is at a discount of 7.44% from Wednesday's closing price on BSE.
Here's what investors should know:
Non-retail investors:
On December 15, only non-retail investors will be allowed to place their bids under the OFS. The bidding will take place during the trading hours of the market.
However, non-retail investors also have the option to carry forward their unallotted bids to the next day (December 16). As per the OFS guidelines, these non-retail investors can also revise their bids on the next day.
Notably, a minimum of 25% of the OFS is reserved for mutual funds and insurance companies subject to receipt of valid bids at or above the floor price. In case of under-subscription from these two category investors, the remaining portion will be available to other bidders in the non-retail category.
Retail investors:
Bidding will be allowed to retail investors and non-retail investors who have to carry forward their bids on December 16.
Retail investors are those individual investors who place their bids for the OFS for a total value not exceeding ₹2 lakh across stock exchanges.
10% of the OFS is reserved for retail investors. The exchanges will decide the number of offer shares that are eligible to be considered in the retail category based on the floor price. However, any unsubscribed portion in the retail category after the allotment to retail investors --- then the leftover shares will be eligible for those non-retail investors who have chosen to carry forward their bids.
In Q2FY23, IRCTC posted a 42.5% growth in net profit to ₹226 crore compared to ₹158.5 crore in the same period a year ago. Revenue from operations skyrocketed by a whopping 99% to ₹805.8 crore from ₹404.9 crore in Q2 of FY22. During the quarter, the PSU's total expenses soared to ₹524 crore, as compared to ₹207.4 crore in the year-ago period. The company's sales rise 368% on-year to ₹334 crore in the reported quarter as against ₹71.4 crore in the same quarter last year.