IRFC OFS draws 1.6x institutional demand; Centre set to raise up to ₹2,400 crore from 2% stake sale

Non-retail investors oversubscribe Indian Railway Finance Corporation offer on Day 1 as the government presses ahead with its FY27 disinvestment programme.

Institutional investors lapped up the government's offer for sale (OFS) in Indian Railway Finance Corporation (IRFC) on Wednesday, subscribing more than the shares reserved for them on the first day of the issue. The strong response comes as the Centre continues to monetise minority stakes in public sector enterprises to bolster disinvestment receipts in the current fiscal year.

According to stock exchange data, non-retail investors bid for over 18.74 crore shares, translating into a subscription of about 1.59 times the 11.76 crore shares earmarked for institutional buyers. The indicative price discovered through the bidding process stood at ₹91.07 per share.

The government is looking to divest up to 2% of its equity holding in IRFC through the OFS route, with an option to sell an additional 1% stake through a greenshoe mechanism depending on investor demand.

Institutional appetite remains robust

The share sale comprises 26.13 crore shares, representing up to 2% of IRFC's equity capital. The floor price has been fixed at ₹91 per share, a discount of about 7.8% to Tuesday's closing price on the BSE.

Based on the floor price, the base issue could fetch the exchequer nearly ₹2,380 crore, with proceeds rising further if the government decides to exercise the greenshoe option.

The Centre is expected to take a call on the additional 1% stake sale after assessing overall demand for the issue.

Retail investors get their turn

While institutional investors participated on the first day, retail investors will be able to bid for shares on Thursday. Traditionally, the OFS mechanism allocates a separate window for retail participation, often with additional incentives such as discounts on the discovered price.

IRFC shares were trading lower during the session, declining 5.47% to ₹93.29 on the BSE, reflecting the discount embedded in the OFS pricing.

Disinvestment momentum gathers pace

The latest stake sale is part of the government's broader strategy of raising resources through minority stake dilution in listed public sector enterprises while retaining management control.

IRFC, the dedicated financing arm of Indian Railways, plays a crucial role in funding rolling stock acquisition and railway infrastructure projects. The company remains one of the largest railway-focused financing institutions in the country and has emerged as a popular PSU stock among retail investors in recent years.

With the IRFC transaction underway, the government's disinvestment proceeds in FY27 are set to rise further. So far this fiscal, the Centre has mobilised around ₹16,480 crore through stake sales in public sector entities, including Coal India, NHPC, GIC, Central Bank of India and NLC India. The strong institutional response to the IRFC OFS is likely to provide further momentum to the government's market-based disinvestment programme.