IRFC Shares Down More Than 1% as OFS Mobilises Rs 2,084 Crore; Greenshoe Triggered

Mumbai, June 29: Indian Railway Finance Corporation (NSE: IRFC) shares traded lower by Rs 1.16 or 1.26% to Rs 90.61 on Monday afternoon in Mumbai as state-owned infrastructure financier successfully concluded its Offer for Sale (OFS), wherein the government raised Rs 2,084 crore and exercised the greenshoe option – indicating strong institutional and retail demand during the issue’s offer period. 

IRFC opened at Rs 91.80 and hit a high of Rs 92.19 intraday early on Monday before trending lower as the session progressed to hit an intraday low Rs 90.42, versus the previous close of Rs 91.77. The VWAP for IRFC is Rs 91.03.  

Order Book 

Today’s order book for IRFC is tilted towards sellers, with 66.26% of all orders or 56,43,882 shares available on the offer compared to 33.74% or 28,73,257 shares from buyers. Bid prices are ranged from Rs 90.56 to Rs 90.60, while asks are between Rs 90.62 and Rs 90.67. 

IRFC Weekly Price Chart 

Indian Railway Finance Corporation shares have been trending lower over the past week. The stock began the week of June 22 trading around Rs 101.00, dipped to around Rs 98.50 on June 23 and then further accelerated to close at about Rs 91.77 on June 27. On Monday, IRFC is extending that losing streak, trading around Rs 90.58. 

The slide from over Rs 101 to current levels of around Rs 90.58 represents a decline of just over 10% over the course of five trading sessions. The week’ downturn tracks with the government’ Offer For Sale (OFS) in the company and resulting supply pressure on the stock. The OFS period and greenshoe trigger could be reasons for some near-term overhang while new investors absorb their positions. 

Company Mobilises Rs 2,084 Crore Through OFS; Greenshoe Option Triggered 

The Centre’ OFS in IRFC saw healthy investor demand throughout the offer period, leading to an estimated Rs 2,084 crore mobilised by the government. When demand exceeds available shares during an IPO, the greenshoe option allows the selling shareholder to issue additional shares to the market beyond the base offer size. The greenshoe trigger indicates strong institutional and retail demand for India’ infrastructure financing entity. 

IRFC finances rolling stock and project assets for the Indian Railways through market borrowings which it on-lends to the railway ministry. IRFC has historically been popular with yield-seeking investors due to its quasi-sovereign credit rating and predictable earnings profile. Investors will be keen to see how successful the OFS was at maximising government disinvestment receipts for this fiscal, and whether IRFC experiences any near- term selling pressure as fresh investors pare their positions. 

What is Indian Railway Finance Corporation? 

Indian Railway Finance Corporation (IRFC) is a special borrowing vehicle for Indian Railways. Set up as a systemically important non-deposit- accepting non-banking finance company (NBFC-ND-SI) in 1986, IRFC raises money from markets which it lends to the Ministry of Railways for purchase of rolling stock and financing rail infrastructure projects. The difference between what it earns on its loans to Indian Railways and what it pays on its market borrowings is IRFC’s profit. Owned by the government of India, IRFC’s business is fully backed by sovereign and considered low-credit risk with stable and predictable earnings history, making it attractive to yield-seeking investors. 

Source

•  https://www.nseindia.com/get-quote/equity/IRFC/Indian-Railway-Finance-Corporation-Limited