Govt Declines Green Shoe In IRFC OFS

The government’s attempt to sell a stake in the Indian Railway Finance Corporation (IRFC) did not attract the kind of demand it was hoping for. After weak participation from both institutions and retail investors, the Centre has decided not to exercise the green shoe option in the recent offer for sale.

Why Did The IRFC Stake Sale Fall Short?

On February 24, the government proposed to put up 2% of its stake in IRFC for sale. This amounted to over 26.13 crore shares at a floor price of ₹104 per share. It also kept the option open to sell another 2% if demand was strong.

That demand never came.

For institutional investors, 23.52 crore shares were reserved. Bids were received for 22.34 crore shares, which means this portion was about 95% subscribed. Retail interest was far weaker. Out of 3.79 crore shares offered to retail investors, bids came in for only about 5.9 lakh shares.

By the end of the issue, the base 2% offer itself had not been fully subscribed. There was a shortfall of about 1.18 crore shares. In a regulatory filing, the company confirmed that the government would not exercise the green shoe option.

A small portion of 25,000 shares was reserved for employees as part of the offer.

Initially, the government planned to sell 4% at the floor price, potentially fetching up to ₹5,436 crore. The government currently holds 86.36% in the company.

How Did The Stock React?

The market response was equally muted.

On the BSE, the stock ended at ₹103.25 on February 26, slipping 1.24%. During the session, it hit a 52-week low of ₹102.50.

The stock has been under pressure for some time. Over the past year, it has fallen about 15%, even as the Nifty gained roughly 13% during the same period.

From a technical standpoint, the stock is trading below its 50-day and 200-day simple moving averages of ₹118 and ₹126. That usually signals weak momentum and cautious sentiment.

The floor price of ₹104 was also very close to the prevailing market price. For short-term investors, that left little room for quick gains, which may have dampened enthusiasm.

Are The Company’s Numbers Still Strong?

IRFC is the dedicated funding arm of Indian Railways. Its job is straightforward. It raises money from domestic and overseas markets and lends it to Indian Railways and related projects.

For the quarter ended December 2025, the company reported a profit after tax of ₹1,802 crore. That is an 11% increase compared to the same period last year, and the highest quarterly profit in its history.

Total income for the quarter stood at ₹6,719 crore. For the nine-month period, income came in at ₹20,009 crore.

Margins improved because the company lent more money at better spreads while keeping its borrowing costs under control. Loan growth has remained steady, supporting earnings momentum.

Also Read - RVNL Bags Three NMDC Orders Worth Approximately ₹2,000 Crores

Investor Takeaway

So the contrast is clear. The company’s operations remain stable and profitable. Yet investor appetite for the stake sale was limited, and the stock continues to hover near its yearly lows.

The key question now is whether strong earnings will eventually rebuild confidence, or whether supply concerns and weak sentiment will keep the stock under pressure in the near term.

Sources:

NDTV Profit

Economic Times