IRCON International slumps 8% amid two-day OFS; government to divest 8% stake

IRCON International witnessed a sharp decline in its share price, plummeting over 8 per cent as the two-day offer for sale (OFS) kicked off. The President of India, representing the Ministry of Railways and the promoter of IRCON, is set to divest an 8 per cent stake in the company, triggering a flurry of market activity.

OFS Details

The floor price for the OFS has been fixed at Rs 154 per share, reflecting a 10.46 per cent discount to the closing price of Rs 172 on the previous day. The government aims to sell up to 3,76,20,629 shares, constituting 4 per cent of the total issued and paid-up equity share capital.

Market Reaction

Post the OFS announcement, IRCON International shares plunged 8.43 per cent to touch a low of Rs 157.50 on BSE, causing the year-to-date rise to narrow down to 166.58 per cent. Analysts note that IRCON has been a consistent performer, but the current market conditions have put the stock under pressure.

Investor Participation

On the opening day, only non-retail investors were allowed to participate in the OFS, while retail investors could join the fray on the following day. In case of oversubscription, the government has the option to sell an additional 4 per cent stake, making the total stake sale 8 per cent of the total paid-up capital.

Employee Participation

IRCON International also announced that eligible employees can apply for shares up to Rs 2,00,000, subject to approval. If there is an unsubscribed employee portion, it will be allotted on a proportionate basis.

Financial Performance

Despite the share price slump, IRCON International reported a robust 44 per cent increase in net profit to Rs 250.8 crore in the September quarter of FY24. The consolidated total income also surged to Rs 3,136.3 crore, reflecting a positive outlook for the company.

Government's Disinvestment Target

The government's move to divest an 8 per cent stake in IRCON is part of its broader disinvestment strategy. So far, it has collected Rs 8,859 crore through share sales in various PSUs in the current fiscal year, falling short of the target of Rs 510 billion.