Ircon shares tank 8% as govt's OFS issue kicks off

Ircon shares tank 8% as govt’s OFS issue kicks off

Learn Team
December 7, 2023

IRCON International Ltd. shares fell by 8% following the announcement that the government plans to sell up to 8% of its stake in the engineering and construction company through an offer for sale (OFS) on exchanges. The Indian government is set to divest 8% equity with the floor price set at RS.154 per equity share. The floor price of RS 154 is at a discount of over 10% from the previous session closing price. The government currently holds a 73.18% stake in IRCON, which is under the Railways Ministry.

IRCON International is a specialized construction company covering the entire spectrum of construction activities and services in the infrastructure sector, with railway and highway construction, EHP sub-stations, and MRTS being its core competence areas.

IRCON International OFS has a base issue size of 4%, or over 3,76,20,629 equity shares, with a green-shoe option to retain an over-subscription of 4%, or 3,76,20,629 shares. The total issue size, including the green-shoe option, comes to 8%, or over 7,52,41,258 shares.

The Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey announced that the OFS will open for non-retail investors on December 7 today, while retail investors can bid on December 8 tomorrow.

About 10% of the offer is reserved for retail investors, while 0.5% of the offer size is reserved for employees. A minimum of 25% of the offer shares are reserved for mutual funds and insurance companies, and in case of undersubscription in this category, the unsubscribed portion will be available to other bidders in the non-retail category.

The government has set a disinvestment target of Rs. 51,000 crore for FY24, from which the government has already realized Rs. 8,858 crore, or 17% of the target, through disinvestments in Coal India, Hindustan Aeronautics Ltd., HUDCO, Rail Vikas Nigam, and SJVN (formerly known as Satluj Jal Vidyut Nigam).

Earlier in October, IRCON was granted navratna status by the Ministry of Finance. This Navratna company has performed a number of corporate actions since its listing on the stock exchange; among those 12 were dividend handouts to its shareholders. In April 2020, the stock was split into a ratio of 10:2, and later in May 2021, the shareholders were awarded a bonus.

Also read: What are Navratna companies and their benefits?

The stock, which was listed at Rs. 41.53 on the bourse (after considering splits and bonuses), has given a return of over 280% and is now trading at Rs. 159.30.