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IRCTC offer for sale ends today: Will shareholders gain from current level?

Share of IRCTC slipped 3.58% intra day to Rs 1,400 against previous close of Rs 1,451 on BSE

twitter-logoBusinessToday.In | December 11, 2020 | Updated 17:55 IST
IRCTC offer for sale ends today: Will shareholders gain from the current level?
IRCTC share trades higher than 20 day, 50 day, 100 day and 200 day moving averages but lower than 5 day moving averages.

IRCTC share ended 1 percent lower on the second and last day of offer for sale (OFS) today. Share of IRCTC slipped 3.58% intra day to Rs 1,400 against previous close of Rs 1,451 on BSE. The large cap stock has lost 15.71% in the last 4 days.

The stock opened with a loss of 3.3%  at Rs 1,404 today. Later, the stock closed 1.84% or Rs 26.75 lower at Rs 1425. IRCTC share trades higher than 20 day, 50 day, 100 day and 200 day moving averages but lower than 5 day moving averages. The large cap share has gained 64.84% in one year and risen 52.59% since the beginning of this year.

Market cap of the firm fell to Rs 22,803 crore on BSE. Analysts were mixed in their views on the outlook of the stock post the share sale.

Abhijeet Ramachandran, Independent Analyst/ Co-Founder and Trainer at Tips2Trade said, "The government's offer for sale (OFS) in IRCTC should have been planned a lot better that is at higher prices post lockdown than at current levels.  Rs 1,300-1,367 which incidentally also is the floor price for the OFS will act as a strong support for the stock now. Hopefully, in the coming months, with a complete exit from lockdown and tremendous pent up demand for travel amongst citizens, the business outlook looks strong for FY22. Long term investors can start accumulating IRCTC at the above support zones for higher targets of  Rs 1,960-Rs 2,350 in the coming months."

The offer for sale (OFS) of Indian Railway Catering and Tourism Corp (IRCTC) for non-retail investors was subscribed 198 percent on the first day of bidding on December 10. On the first day, the share opened with a loss of 13.17% at Rs 1,405 against previous close of Rs 1,618.

The issue will close today.

Why IRCTC share has gained 26% in three sessions

Yash Gupta, Equity Research Associate at Angel Broking said, "We expect listing gains to be very limited in case of IRCTC OFS as there is no retail discount given by the company. As the cut-off rate of IRCTC OFS is  Rs 1,377.55 and current market price is around  Rs 1,415 representing a discount of 2.8% only. So post offer for sale, we expect IRCTC to trade near its cutoff price only."

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On day 1 of the offer, non-retail category saw subscription of 4,27,68,445 equity shares against the base offer size of 2,40,00,000. "The government plans to sell up to 2,40,00,000 equity shares of IRCTC, representing up to 15 per cent stake, with an option to additionally sell 80,00,000 shares, representing 5 per cent of the total issued and paid up equity share capital," the company said in a regulatory filing.

The floor price for the OFS was fixed at Rs 1,367. Currently, the government holds 87.40 per cent stake in IRCTC. To meet Sebi's public holding norm, it has to lower its stake in the company to 75 per cent.

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