Govt may sell stake in IRCTC through offer for sale route

The government plans to pare its stake in Indian Railway Catering and Tourism Corporation (IRCTC) through offer for sale route. The share sale will be part of the Narendra Modi's government ambitious  Rs 2.1 lakh crore disinvestment process for fiscal 2020-21. After the IPO of IRCTC held last year, stake of the government in IRCTC has been reduced to 87.40%.

According to a CNBC-Awaaz report, the Department of Disinvestment has invited bids for the appointment of merchant bankers and selling brokers.

The pre-bid meeting for the OFS will be held on September 3, the report stated, adding that bids will have to be submitted from September 4-10. The bidding process will begin on September 11.

Through the OFS route, a listed company can sell its shares via exchange platform itself. In an OFS, a minimum of 25% of shares offered are reserved for institutional investors such as mutual funds and insurance companies.    

In an IPO held in September 2019, government which held 100% in IRCTC through Indian Railways sold 12.6% of its stake. Bids for IRCTC shares were invited in a price band of Rs 315 to Rs 320 during the IPO held from September 30 to October 3.

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The issue involved sale of 2.01 crore equity shares of face value of Rs 10 each in a price band of Rs 315 to Rs 320. The IPO was subscribed nearly 111.80 times on the last day of bidding. The IPO received bids for 225.39 crore shares compared to the issue size of 2.01 crore shares.

On October 14, IRCTC shares listed with a gain of over 100% compared to its issue price of Rs 320 per share on the bourses. IRCTC share which saw subscription of nearly 112 times on the last day of initial public offer (IPO) listed at Rs 644 on BSE  and Rs 626 on NSE.

IRCTC is engaged in internet ticketing, catering, packaged drinking water and travel and tourism. IRCTC has also diversified into other businesses, including non-railway catering and services such as e-catering, executive lounges and budget hotels.

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