The sale is of IRFC shares, not railway assets.
NEW DELHI: The Government of India launched a two-day offer for sale in Indian Railway Finance Corporation on June 24 2026, setting a floor price of Rs 91 per share against Tuesday’s closing price of Rs 98.37 on BSE a discount of 7.49 percent. Institutional and non-retail investors were given first access on June 24 with retail investors permitted to bid on June 25. DIPAM Secretary Arunish Chawla confirmed the structure via an official post: a base divestment of 1 percent equity with an additional 1 percent under a green shoe option exercisable if demand holds. IRFC shares fell as much as 5.7 percent intraday to Rs 93.52 on BSE extending the stock’s year-to-date decline to 25.46 percent even as the broader Sensex surged 790 points on the same day.
How the OFS Is Structured
The base offer comprises 13,06,85,060 shares representing 1 percent of IRFC’s paid-up capital of which 90 percent is reserved for institutional and non-retail investors and 10 percent for retail. The green shoe option adds another 13,06,85,060 shares taking maximum potential dilution to 26,13,70,120 shares or 2 percent of equity. Up to 25,000 shares are separately reserved for eligible IRFC employees. No retail or employee discount was offered in this transaction all categories bid at or above the Rs 91 floor.
The allocation mechanism differs by investor type. Institutional bidders are allocated shares on price priority at multiple clearing prices. Retail investors can bid at the cut-off price with the final allocation price matching whatever clearing price emerges from institutional demand.
Day One: Slow Start and Strong Finish
The early hours of institutional bidding told a different story from where the day ended. At one point in the morning non-retail bids stood at just 2,700 shares against a base institutional quota of 11,76,16,554 shares a gap that initially amplified market anxiety. However participation accelerated sharply through the afternoon. By close of trading institutional buyers had bid for over 18.74 crore shares, translating to a Day 1 subscription of approximately 1.59 times the non-retail base quota. The indicative clearing price settled at Rs 91.07 marginally above the Rs 91 floor. Total trading volume in IRFC on June 24 reached 4,31,66,756 shares more than four times the stock’s average daily volume of 98.87 lakh shares.
DIPAM indicated that a decision on exercising the green shoe option would be taken after assessing aggregate demand from both retail and carry-forward institutional tranches on June 25.
What IRFC Is and Why It Was Priced Here
IRFC is the dedicated financing arm of Indian Railways, established in 1986 and classified by the RBI as a Systemically Important Non-Deposit Taking NBFC and Infrastructure Finance Company. It holds Navratna status and raises long-term debt from domestic and overseas markets to fund rolling stock acquisition and railway infrastructure, leasing assets back to the Ministry of Railways under cost-plus agreements. This model gives IRFC a zero non-performing asset ratio its sole borrower is sovereign-backed. Historically it has financed 13,764 locomotives, 76,735 passenger coaches and 2,65,815 wagons covering approximately 75 percent of Indian Railways’ total rolling stock fleet.
In FY26, revenue from operations rose marginally to Rs 27,284 crore from Rs 27,152 crore in FY25. Net profit grew 7.8 percent to a record Rs 7,009 crore supported by a 2.39 percent reduction in finance costs. Net interest margin improved to 1.50 percent. Total assets under management reached Rs 4,84,617 crore. The government held 84.65 percent of IRFC as of March 31 2026. Full exercise of the OFS would reduce that to an implied 82.65 percent.
At the Rs 91 floor price, IRFC trades at a price-to-book ratio of approximately 2.10 times based on the audited book value per share of Rs 43.42 as of March 31 2026 a significant discount to the stock’s 2024 peak of Rs 229 where it commanded a P/B above 5 times.
The Divestment Context
This is the sixth PSU divestment of FY27 and the government’s second attempt to pare its IRFC holding. In February 2026, a larger 4 percent OFS at Rs 104 per share attracted only 94.98 percent subscription on the institutional tranche forcing the government to abandon the green shoe and settle for a 1.71 percent dilution. The revised structure at a steeper discount has produced stronger institutional response this time.
The government’s FY27 divestment target is Rs 80,000 crore. The Rs 16,480 crore raised so far represents approximately 20.6 percent of that target. Full exercise of the IRFC green shoe would add approximately Rs 2,378 crore at floor price, taking cumulative proceeds to roughly Rs 18,858 crore. A pipeline of further transactions is being prepared with reports suggesting a possible LIC OFS of approximately Rs 10,000 crore in late June or early July though that remains unconfirmed.
What Retail Investors Should Know Before June 25
Retail applications are capped at Rs 2,00,000 in aggregate value. Bidders can choose the cut-off price option to ensure allocation at whatever clearing price emerges. Funds must be in the trading account at the time of placing the bid. A single PAN cannot be used to bid in both retail and non-retail categories and bids cannot be revised or cancelled after the bidding window closes.
Market views on the OFS are divided. Rajesh Palviya, Senior Vice President of Research at Axis Securities, was direct: “IRFC stock has not delivered meaningful returns over the past year, and the overall structure remains weak. Stay away from the OFS and also from the stock as there are no strong positive triggers visible.” Others point to the zero-NPA balance sheet, stable margins and an annualised dividend yield of approximately 2.26 percent at current prices as reasons for long-term yield-focused investors to consider entry. The regulatory reason behind the OFS SEBI’s minimum public shareholding requirement of 25 percent, which IRFC’s listing window has now passed means further stake sales are structurally inevitable regardless of timing or market conditions.
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