IRCTC shares were falling by 1.2% on BSE today after an acute fall in the earlier session. The government on Thursday declared that it will utilise the oversubscription alternative to the extent of 80,00,000 equity shares in addition to the base proposal size. Shares were under pressure after the government on Wednesday stated an offer for clearance of its 20% stake in the association. The base price of ₹1,367 was at a 15% discount to the closing cost of Wednesday.
The Government stated about the exchanges on Thursday that they wish to utilize the options of oversubscription to the limit of 80,00,000 equity shares, along with the base offer sizes and the accumulated offer size will be around 3,20,00,000 equity shares. This means 20% of IRCTC's shares. This can be considered a bold or huge step.
The two-day proposal for purchase of Government shares will stop today. The government possessed 87.40% stake in IRCTC as of September 30, 2020.
DIPAM Secretary Tuhin Kanta Pandey said in a tweet that the offer for sale of shares by Govt got a really nice response on the first day. Also, Issue contributed 1.98 times of base size at a fair price fairly above the base price by non-retail, investors etc. Govt, at last, came forward to exercise the greenshoe option.
The fall in IRCTC share price is considered a good opportunity for investors to add the stock to their portfolio. IRCTC is one of the big companies which provides great and long term services of Quality food in Indian Railways along with catering services.
"Since IRCTC enjoys the power of monopoly the discount seems good enough to attract the retail investors. As things started returning back to normalcy, IRCTC is expected to benefit further once more trains resume. Its e-ticketing business is also expected to boom in the near term. Therefore, this could be a good opportunity for investors to add this stock to their portfolio," says Gaurav Garg, Head of Research, CapitalVia Global Research.
In the past four days, IRCTC shares have fallen around 15%. Such drops are rare. IRCTC, the only company approved by Indian Railways to render catering services, online railway tickets and packaged drinking water at railway stations and trains in India. The company was listed on the stock exchanges in October 2019. The company had gained around ₹645 crores through the IPO.