Indian Railway Finance Corporation (IRFC) share price extended fall for second day on Thursday, 25 June. IRFC shares plunged over 1% to 91.55 apiece on NSE as the offer for sale (OFS) opened for retail investors today, 25 June.
opened at ₹91.01 apiece today, as compared to previous close of ₹92.50 on Wednesday.
IRFC OFS details
Non-retail investors fully subscribed to the on Wednesday, placing bids for 1.86 times the shares reserved for their category. Following the strong response, the Centre has decided to exercise the greenshoe option.
Under the OFS, the government is offering up to a 2% stake in IRFC, comprising a base issue of 1% or 13.06 crore shares, along with an additional 1% stake through the greenshoe option. The floor price for the sale has been fixed at ₹91 per share.
As of the quarter ended March, the government owned 84.65% of IRFC, while retail and non-retail investors held 9.68% and 1.02% stakes, respectively, according to stock exchange data.
As per exchange data, the government held an 84.65% stake in IRFC at the end of the March quarter, while retail investors owned 9.68%.
The OFS is likely to enhance the stock’s free float and liquidity, while providing investors with another opportunity to gain exposure to one of India’s largest railway financing firms.
The IRFC stake sale is part of the government’s ongoing divestment programme, which has gathered pace following recent OFSs in Coal India, Central Bank of India, NLC India, NHPC and General Insurance Corporation of India (GIC). In each of these transactions announced this year, the government exercised the greenshoe option after receiving robust investor demand.
For FY27, the government has set a disinvestment target of ₹80,000 crore. Earlier this year, Finance Minister Nirmala Sitharaman indicated during a post-Budget briefing that the divestment agenda would be intensified, with greater emphasis on reducing government holdings in central public sector enterprises (CPSEs).
Should retail investors participate or not?
Seema Srivastava, Senior Research Analyst at SMC Global Securities, believes that the appears unattractive from a short-term listing gain perspective. The institutional portion closed with the cut-off price settling at the floor price of ₹91, and subscription was only marginally achieved, while even the oversubscription (greenshoe) option failed to attract sufficient demand.
Srivastava noted that this indicates limited appetite from institutional investors despite the offer being available at an 8% discount to the pre-OFS market price of ₹98.69. Typically, strong institutional participation acts as a positive signal for retail investors; however, the subdued response suggests concerns regarding near-term valuation comfort, government stake dilution overhang, and limited upside catalysts.
“At the OFS price, investors receive a discount of around 7.8% to the CMP, which provides some downside cushion, but the absence of a retail discount reduces the attractiveness of the offer,” she said.
She recommended retail investors seeking quick gains may avoid the OFS due to weak institutional demand and the possibility of post-OFS price pressure.
“Long-term investors with a 3–5 year horizon may consider participating at ₹91 for dividend income and gradual capital appreciation, but expectations of immediate returns should remain moderate,” she added.
Meanwhile, Harshal Dasani, Business Head – INVasset PMS, highlighted that IRFC’s OFS should be read as a valuation and supply event, not a deterioration in the franchise.
“IRFC remains a strategically important railway financier with a clean operating model, yet the latest quarterly print shows the real issue: revenue growth is visible, but profit growth is not accelerating at the same pace. The business is stable; the rerating has already done a lot of work,” Dasani said.
He further said that for retail investors, the OFS discount is useful only as an entry cushion, not as the investment thesis. The railway capex cycle remains supportive, and higher free float can improve liquidity over time. But after the PSU railway rerating, future returns are likely to depend more on loan-book growth, borrowing spreads and fresh capex execution than on the railway narrative itself.
“Participation is better suited for patient investors who can tolerate policy-linked earnings and short-term supply pressure; it is not a quick arbitrage trade,” he added.
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