IRCTC shares sank 5% as the government announced an OFS (offer for sale) for up to 5% of the stake in IRCTC (Indian Railway Catering and Tourism Corporation). The scrip touched an intraday low of Rs 696.35 on NSE. The floor price for the OFS is set at Rs 680 per share, and at this price, the government will net Rs 2,720 crore after offloading their stake. The government will sell 2.5% of their stake first, with the option to sell an additional 2.5%, totaling 4 crore equity shares.
The price of Rs 680 comes in at a 7% discount to Wednesday’s closing price of Rs 734.70 on the BSE. Currently, the Indian government owns a 67% stake in the company, which has a market cap of Rs 58,792 crore. “IRCTC share price opened lower at 698.50 and made a low of 696.35 while opening the market. Technically the trend of stock is bullish, in last 4-5 months its trading in the sideways range of 750 to 650, and now it is near 200 Days SMA on daily chart. For price recovery and further upside movement, stock should be able to sustain above the major level of 710. If it happens, then bullish momentum can resume again and on the higher side 750 and 820 levels can be seen in the near term. One should keep stop loss at 650 on closing basis,” Rameshver Dongre, Research Analyst – Equity Research, CapitalVia Global Research.
“IRCTC has given a breakdown of head & shoulder pattern formation with long consolidation on the longer time frame with huge volume. The structure of the counter became distorted as it traded below its all-important moving averages, but it is in a demand zone near 690. On the upside, 710 is an immediate susceptible area; above this, we can expect a run-up towards 740+ levels in the near term,” stated Pravesh Gour, Senior Technical Analyst, Swastika Investmart.
“The Promoter proposes to sell up to 2,00,00,000 Equity Shares of the Company on December 15, 2022, (“T day”) for non-Retail Investors only and on December 16, 2022 (*T+l day”) for Retail Investors and for non-Retail Investors who choose to carry forward their unallotted bids,” said the company in a statement filed with the exchanges.
Therefore, retail investors will only have the opportunity to place their bids for these discounted shares on Friday while non-retail investors can bid today onwards. 25% of these shares will be set aside for insurance companies and mutual funds while 10% will be reserved for retail investors.
This sale comes as the government aims to achieve its divestment target of Rs 65,000 crore for FY23. So far, the government has managed to raise Rs 28,383 crore from divestments this fiscal year. The previous divestment came when the government offloaded its shares from private sector lender Axis Bank, totaling Rs 3,839 crore last month.