IRFC shares in focus after government choses to not use oversubscription option in OFS

Shares of Indian Railway Finance Corporation Ltd. (IRFC) will be in focus on Thursday, February 26, after the government has decided to not exercise the oversubscription or greenshoe option in its Offer For Sale (OFS).

In its exchange filing on Wednesday, IRFC highlighted that the government, who is also the company's promoter, will not be exercising the oversubscription option to sell an additional 2% stake in the company, since there is undersubscription of 1.18 crore equity shares of the company on Wednesday, which was when the OFS had opened for subscription for non-retail investors.

"Accordingly, the total offer size will be the base offer size of 26.13 crore equity shares or 2% of the company's outstanding," the filing stated.

Out of this, 3.79 crore shares, or 14.52% of the total offer will be available for retail investors, when subscription opens on Thursday, subject to receipt of valid bids.

The portion reserved for non-retail investors was subscribed 95% on Wednesday, according to data on the BSE.

The government had initially planned to sell 2% stake in IRFC, with an additional green shoe option of another 2%. In case the greenshoe option was fully subscribed at the floor price, it could have fetched the government over ₹5,400 crore.

In an interaction with CNBC-TV18, IRFC CMD Manoj Kumar Dubey stated that sanctions for the full financial year will range between ₹80,000 crore to ₹90,000 crore. The company has already surpassed its disbursement and sanctions guidance for the full year.

Dubey stated that the benefits of the company diversifying beyond railway projects to Metros and port financing will show up from the first quarter of financial year 2027.

As of December 31, the government had a 86.36% stake in IRFC, 11.36% higher than the Minimum Shareholding limit of 75%. The excess stake, at the floor price, was worth over ₹14,000 crore.

Shares of IRFC ended 4.6% lower on Wednesday at ₹104.49, which is nearly the same as the OFS floor price set by the government. The stock is down over 50% from the record high of ₹229 that the stock had surged to in July 2024.