Shares of Indian Railway Finance Corporation (IRFC) fell sharply on Wednesday after the government announced plans to sell up to a 2% stake in the railway financing company through an Offer for Sale (OFS).
The stock was trading at Rs 93.46 around 9:49 am, down over 5% for the day. The decline adds to the pressure on the PSU stock, which has fallen nearly 7% over the past month, 23% in six months and more than 32% over the past year.
The main trigger is the government’s decision to dilute its stake in the company.
On Tuesday, the Department of Investment and Public Asset Management (DIPAM) said the government would sell a 1% stake in IRFC, with an option to offload an additional 1% if investor demand remains strong.
The stake sale will be carried out through the OFS route. The offer opens for non-retail investors on Wednesday and for retail investors on Thursday.
The government currently owns 84.65% of IRFC.
Investor sentiment was also hit by the OFS floor price.
According to a BSE notice, the government has fixed the floor price for the OFS at Rs 91 per share.
The floor price is lower than the stock’s previous closing price, which typically creates selling pressure as investors expect shares to gravitate closer to the offer price during the OFS period.
This discount is one of the key reasons why IRFC shares came under pressure immediately after the announcement.
An Offer for Sale allows promoters or large shareholders of listed companies to sell shares directly through stock exchanges.
For investors, an OFS often provides an opportunity to buy shares at a discount to the prevailing market price.
However, existing shareholders sometimes react negatively because the increased supply of shares can weigh on the stock in the short term.
This is not the first time the government has attempted to reduce its stake in IRFC.
In February, the Centre had proposed selling up to a 4% stake in the company. However, it eventually managed to divest only 1.71%.
The latest OFS is part of the government’s broader divestment and asset monetisation programme.
In the Union Budget, the government set a divestment and asset monetisation target of Rs 80,000 crore for FY27.
Market experts generally view OFS-related declines as technical rather than business-related.
The fall in IRFC shares does not stem from any deterioration in the company’s operations or earnings. Instead, it reflects concerns around the discounted offer price and the temporary increase in share supply.
Investors will now watch the response to the OFS closely. Strong demand could help stabilise the stock, while weak participation may keep pressure on the share price in the near term.
For now, the government’s stake sale announcement remains the primary reason behind Wednesday’s sharp decline in IRFC shares.
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