IRCTC OFS 2022: Govt to sell up to 5% at ₹680

What the government announced

The Government of India has announced an offer for sale (OFS) of up to a 5% stake in Indian Railway Catering and Tourism Corporation (IRCTC). The sale is being conducted through the stock exchanges over two trading days, with bidding on 15 and 16 December. The floor price has been set at ₹680 per share, according to regulatory filings and official releases cited in the reports. The OFS is part of the Centre’s broader disinvestment plan for 2022-23. The stated divestment target for 2022-23 (April to March) is ₹65,000 crore. IRCTC is a listed state-owned company where the Centre remains the promoter. After the stake sale, the government will still remain the controlling shareholder, given its existing holding.

Offer size, base issue and the green shoe option

The OFS involves up to 4 crore equity shares, which is equivalent to up to 5% of IRCTC’s paid-up equity share capital. The base offer consists of 2 crore shares, representing 2.5% stake. The government also has the option to sell an additional 2 crore shares, another 2.5% stake, if the issue is oversubscribed. Multiple reports described this as an “option to retain over-subscription” of a similar amount, which is effectively the green shoe component of the transaction. At the floor price, selling the full 5% could fetch around ₹2,720 crore (₹27.2 billion), based on a Reuters estimate also referenced in the article data. The same estimate put the potential dollar proceeds at about $129.90 million.

Floor price and the discount to the market

The floor price of ₹680 was set at a discount to IRCTC’s previous close. Reports cited Wednesday’s closing price around ₹734.70 to ₹734.90, implying a discount of a little over 7% (and up to about 7.8% in one reference). The offer price level matters because it typically guides how the stock trades during the OFS window. The discount was highlighted as a key factor for investors assessing participation. It also framed the market reaction once bidding opened. Because the floor price was below the prevailing market price, the stock moved closer to the OFS level as trading began.

Who can bid and when: non-retail first, retail next

The OFS opened first for non-retail investors on Thursday, 15 December, during market trading hours. Retail investors could bid on Friday, 16 December, and non-retail investors were also allowed to carry forward their bids on that day. A portion of the issue was reserved for specific investor categories. About 10% of the OFS was reserved for retail investors, as stated in the reports. In addition, at least 25% of the OFS shares were reserved for mutual funds and insurance companies, subject to receiving valid bids at or above the floor price. These allocation rules are standard OFS features and can influence demand patterns across the two days.

Day-one demand: institutional bids and oversubscription

On day one, the OFS was reported to be oversubscribed based on institutional participation. Institutional investors put in bids valued at about ₹3,800 crore, calculated on the basis of the ₹680 floor price. The same report said bids were received for more than 5.55 crore shares. That demand was described as 3.08 times the base issue size of 1.80 crore shares, as per the figures cited. The oversubscription data was a key signal of non-retail appetite at the offered price, particularly given the size of the transaction and the discount to the previous close.

Stock reaction during the OFS window

IRCTC shares fell as the OFS opened for non-retail investors. One data point mentioned the stock dropped 4.70% to ₹700.20 on 15 December 2022. Another update said IRCTC shares closed at ₹689.20 on the BSE, down 6.19% for the day. During the session, the stock reportedly touched a low of ₹687, but held above the OFS floor price of ₹680. Other quoted prices included ₹693.40 on the NSE and ₹693.55 on the BSE at a specific point, reflecting the broader downward move during the offer period. Overall, the reported prices showed the market recalibrating toward the floor level while still trading above it.

Company context: what IRCTC does and promoter stake

IRCTC is described as the only firm authorised by Indian Railways to manage food services on trains and to offer online railway ticket booking services. That position makes it a key rail-linked consumer and services company in the listed market. The Centre held a 67.40% stake in IRCTC prior to the OFS, as stated in the article data. The OFS is therefore a partial stake sale by the promoter rather than a change in business operations. The transaction’s primary purpose is fiscal, helping the government mobilise proceeds under its disinvestment programme.

Deal managers and execution

The OFS was to be conducted on both BSE and NSE. Brokers named for the transaction included Axis Capital, Citigroup Markets India, and JM Financial Institutional Securities. The transaction structure follows the OFS mechanism, which enables promoter share sales with transparent bidding through exchanges. The presence of category-wise reservations and the two-day schedule were key design elements reported. With the floor price and the number of shares publicly disclosed, investors could compare the offer terms directly with the prevailing market price.

Key facts at a glance

Market impact and why this OFS matters

The immediate market impact was visible in the stock’s decline during the OFS window, with reported moves taking the price toward the offer floor. For investors, the discount and the floor price became the central reference points for near-term price discovery. For the government, the transaction is tied to the stated ₹65,000 crore divestment target for 2022-23. The reported day-one institutional oversubscription showed demand at the offered price, even as the secondary market price softened. The final outcome depends on bids across both days, including retail participation on Friday and the extent to which the additional 2.5% option is exercised.

Conclusion

The government’s OFS for up to 5% of IRCTC at a ₹680 floor price sets up a two-day stake sale with clear category reservations and a defined discount to the prior close. With non-retail bidding on 15 December and retail bidding on 16 December, investors will watch subscription levels and the stock’s ability to trade above the floor through the offer period. The sale, if fully exercised, is expected to raise around ₹2,720 crore for the exchequer as part of the Centre’s 2022-23 disinvestment programme.