"IOC disinvestment proposal is likely to come up for consideration in CCEA (Cabinet Committee on Economic Affairs) meeting tomorrow," sources said, adding that the stake sale would happen through the offer for sale route.
The Disinvestment Department has already selected five merchant bankers Citibank, HSBC, UBS Securities, SBI Capital and J M Financial to manage the stake sale of the oil major.
Shares of IOC were trading at Rs 226.90, up 0.44 per cent, in afternoon trade on the BSE. At the current market price, the sale of the 19.16 crore shares would fetch Rs 4,347 crore to the exchequer.
At present, the government holds a 78.92 per cent stake in IOC.
IOC, the nation's largest refiner, has a market capitalisation of Rs 54,519 crore. It posted a net profit of Rs 5,005 crore in 2012-13, up from Rs 3,954 crore in the previous year.
The company's profit peaked at Rs 10,221 crore in 2009-10. IOC sells fuel at below-market prices, for which it is partially compensated by the government.
The disinvestment target through PSU stake sales in the current financial year is Rs 40,000 crore. So far, it has raised Rs 828 crore through stake sale in MMTC and Hindustan Copper.