President of India to sell 52,27,40,240 shares of this railway company via OFS

The Government of India has officially launched an Offer for Sale (OFS) to divest up to a 4 per cent stake in the Indian Railway Finance Corporation (IRFC). This strategic move, orchestrated by the Ministry of Railways, is primarily designed to bring the company into compliance with the Minimum Public Shareholding (MPS) norms mandated by SEBI. The bidding process is scheduled to take place over two days, starting with non-retail investors on February 25, 2026, followed by retail participants on February 26.

The divestment structure includes a base offer of 2 per cent of the company’s total paid-up equity, involving approximately 26.14 crore shares. To account for potential high demand, the government has included a "green shoe" or oversubscription option for an additional 2 per cent, which would bring the total sale to 4 per cent of IRFC’s equity. If the full 4 per cent is offloaded, the government’s ownership in the Navratna PSU will decrease from 86.36 per cent to 82.36 per cent.

Financial details of the offer reveal a floor price of Rs 104 per share, representing a discount of roughly 5 per cent compared to the previous day's closing price. At this valuation, the exchequer expects to mobilize between Rs 5,430 crore and Rs 5,436 crore, provided the oversubscription option is fully utilized. Goldman Sachs (India) Securities Private Limited has been appointed as the sole broker to manage the transaction across the NSE and BSE platforms.

The participation framework ensures a dedicated allocation for various investor classes. Ten percent of the shares are reserved specifically for retail investors with bid values under Rs 2,00,000, while a minimum of 25 per cent of the offer is set aside for mutual funds and insurance companies. Furthermore, eligible IRFC employees have been granted a small reservation to apply for shares, though notably, no additional discounts have been extended to either employees or retail bidders.

On the financial front, the divestment comes at a time when IRFC is reporting record-breaking performance. For the third consecutive quarter ending December 2025, the company posted its highest-ever quarterly profit after tax (PAT) of Rs 1,802 crore, a 10.52 per cent increase year-on-year. This growth was bolstered by improved net interest margins and disciplined liability management, with total income for the nine-month period reaching an impressive Rs 20,009 crore.

Despite these strong fundamentals, the equity markets reacted with caution to the announcement. IRFC shares experienced a sharp decline of over 4 per cent on Wednesday, falling to near the floor price of Rs 104.82 on the NSE. Trading volumes surged to nearly twice their 20-day average as investors adjusted to the new supply of shares. This downward movement reflects a broader trend of technical weakness, as the stock has underperformed the Nifty 50 over the past year.

As the financing arm of the Indian Railways, IRFC remains a critical entity for mobilizing extra-budgetary resources for national infrastructure. While the stock currently trades below its 50-day and 200-day moving averages, the government's move to reduce its stake is a necessary regulatory step. The successful completion of this OFS will enhance the stock's liquidity and move the public sector enterprise closer to the long-term governance standards required for listed entities.

Disclaimer: The article is for informational purposes only and not investment advice.