Multibagger IRFC plunges 6% on government stake sale news

economictimes.indiatimes.com:

Indian Railway Finance Corporation (IRFC) fell nearly 6% on the NSE in Thursday's trade after reports that the government was considering selling its stake in the company. The news triggered a strong selling action in the stock, with over 5.65 crore shares changing hands on the NSE around 10:15 am. The multibagger stock which has given more than 130% returns over a 12-month period has significantly outperformed the Nifty which has yielded just over 8% returns during this time.

On Wednesday, media reports suggested that the government is considering selling some of its stake in the state-owned IRFC as it aims to meet its divestment targets for the year. The government owns a little over 86% of the Indian Railways' funding arm. «The stake sale would take place soon,» a Reuters report said quoting a government official.

While the government is yet to decide the exact quantum of sale, it will aim to sell up to 11% in multiple tranches, the report added. Last month, the government sold a more-than-5% stake in another state-run railways company, Rail Vikas Nigam, raising Rs 1366 crore ($164.34 million). So far in fiscal 2024, it has raised Rs 5600 crore against a target of Rs 51,000 crore.

The report further claimed that the Ministry of Finance did not immediately respond to its request for comment. The sale would also have the added advantage of the government adhering to the regulator-mandated minimum public shareholding norms, which requires that public companies maintain at least 25% public shareholding. While state-run firms have greater leeway in this regard, the government intends to bring down its shareholding in line with the norms.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are