INVC NEWS
New Delhi : The Indian Government is set to make a significant move in its divestment strategy by selling an 8% stake in IRCON International, a key entity in the railway sector. This decision is a critical component of the government’s broader agenda to reduce its share in public enterprises. The stake sale is slated to begin on Thursday, with the objective of generating around INR 1,100 crore.
Details of the Stake Sale
IRCON International, an engineering and construction company with substantial railway expertise, is at the heart of this divestment. The government plans to offer its shares through an Offer for Sale (OFS) mechanism, with the minimum price set at INR 154 per share. Initially, a 4% stake will be up for sale, with the possibility of an additional 4% being offloaded if the offer is oversubscribed.
Impact on Investors and the Stock Market
This divestment news has stirred interest among both retail and non-retail investors. Retail investors will have the opportunity to bid for the shares starting Friday, following the opening of bids for non-retail investors on Thursday. The stake sale will involve around 7.53 crore equity shares at the minimum price of INR 154 per share, potentially adding about INR 1,100 crore to the government’s coffers.
Government’s Stake in IRCON Post-Sale
Currently, the government holds a 73.18% stake in IRCON. Successful completion of this divestment will reduce this figure significantly, aligning with the government’s objective to streamline its role in public enterprises. This sale is part of a larger financial goal set in the 2023-24 budget, which aims to accumulate INR 51,000 crore through the disinvestment of public sector units.
Market Response to the Divestment Announcement
The announcement has had a noticeable impact on IRCON’s stock performance. Despite a general upward trend in the stock market, IRCON’s shares experienced a decline, closing at INR 171.65 after a nearly 1% drop. Further fluctuations were observed post-announcement, with the stock dipping to INR 158.85. However, it’s essential to consider the stock’s 52-week high of INR 179.90 and its impressive 97% rise over the past six months, along with a 188% return in the year-to-date.
Government’s decision
The Indian Government’s decision to sell a stake in IRCON International marks a significant step in its divestment strategy, reflecting a commitment to reducing its presence in public enterprises. This move is expected to attract substantial interest from investors, contributing to the government’s broader financial objectives while reshaping the landscape of public sector investments.
