IRCTC’s Non-Retail OFS Gets 198% Demand Even As Shares Fall Most On Record
Shares of IRCTC fell the most since the company went public last year.
Shares of Indian Railways Catering and Tourism Corp. fell the most on record in Thursday's trading session. The company's non-retail Offer for Sale received demand for 198% of the total number of shares on offer.
The bids were received at Rs 1,391.42 per share, higher than the floor price of Rs 1,367 per share, according to Bloomberg data.
The OFS for retail investors will open for subscription tomorrow.
The government will sell 20% of its shareholding in IRCTC—authorised by Indian Railways to offer catering services, online tickets and packaged drinking water, under the brand name Rail Neer, at stations and trains—through the OFS.
The initial sale will be for 15% stake or 2.4 crore shares, while it will retain a greenshoe option of selling another 5% stake or 80 lakh shares, Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey had said in a tweet on Wednesday.
The government, according to the latest shareholding pattern, held 87.4% stake in IRCTC. It intends to lower holding to 67.4% after the sale.
“Once things start to normalise, it is a monopoly business. The discount is good enough to attract retail investors, and one must buy into this,” Dharmesh Kant, independent market expert, told BloombergQuint.
According to Urmil Shah of IDBI Capital Markets, a retail investor who has a 12-month time horizon should subscribe to the OFS. “As more trains resume, the e-ticketing business will benefit, which is more than 70% of total EBIT. They can then also resume their original menu for the catering business and can increase prices. Other segments should also see improvement in FY22/23,” Shah told BloombergQuint over the phone.
Shares of IRCTC ended 10.2% lower—the most since the company went public last year—to Rs 1,452.75 apiece on Thursday. The stock declined for the third straight day.
Yet, all three analysts tracking IRCTC have a ‘buy’ rating. The average of Bloomberg consensus 12-month price targets implies an upside of 16%.