The government will not exercise the oversubscription option for the ongoing IRFC OFS after the issue was not fully subscribed on the opening day. The issue, which opened to non-retail investors on Wednesday, was subscribed to 95% (0.95 times) of the 2% stake, amounting to 26.13 crore shares. Should private investors participate?
This is what experts say
Ravi Singh, Chief Research Officer at Master Capital Services, said the OFS creates a short-term supply event. Singh, however, emphasized that IRFC remains fundamentally strong, supported by quasi-sovereign credit quality, stable revenues and its critical role in financing rail infrastructure projects.
On whether investors should participate in the OFS or wait for clarity after the sale of the shares, Singh noted that timing and valuation are crucial. Currently, IRFC is trading at a discount to its historical multiples, although robust loan book growth and higher government capital expenditure on railways have supported a premium valuation in recent periods.
Typically, OFS prices are at a discount to prevailing market levels, providing an entry opportunity. Conservative investors may prefer to wait until the OFS is completed and prices have stabilized. Investors comfortable with short-term fluctuations may consider subscribing during the OFS to take advantage of potentially lower prices. Overall, the stake sale is unlikely to change IRFC’s long-term fundamentals, but does provide investors with a tactical opportunity to reassess their positioning, he added.
Santosh Meena, head of research at Swastika Investmart Ltd, said Indian Railway Finance Corporation remains a stable, monopoly-like entity as the dedicated financing arm for Indian Railways’ capital investments, essentially lending and lending to the railways at low costs. The low-risk business model, supported by government support, ensures consistent profitability and stable dividend payments. Importantly, the proposed share sale does not change control as the government will continue to maintain a dominant majority post-OFS, leaving operations unaffected. He added that the OFS could marginally improve liquidity and free float, which would promote better price discovery and potentially support index inclusion or upgrades in the long term.
IRFC Q3 snapshot
Last month, the company reported its highest-ever quarterly profit for the third quarter in a row, supported by steady lending growth and improving margins. For the quarter ended December 2025, IRFC posted a profit after tax of Rs 1,802 crore, marking an increase of 11% year-on-year (year-on-year) and the highest quarterly profit in the company’s history.Net interest margins improved by more than 8% year-on-year during the quarter, helped by value-add payouts in diversified segments and disciplined liability management. Total income stood at Rs 6,719 crore for the quarter, while income for the nine-month period stood at Rs 20,009 crore.
Third quarter revenues fell to Rs 6,661 crore from Rs 6,763 crore a year ago. The company said the marginal year-on-year moderation in quarterly revenues was largely due to a one-year extension of a moratorium granted by the Ministry of Railways on a project lease agreement, which impacted revenue recognition during the period.
IRFC stocks are a major laggard, down 12% in a year, while Nifty is up 11% in the same time. It is currently trading below the 50-day and 200-day simple moving averages (SMAs) of Rs 118 and Rs 126 respectively.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
#IRFC #OFS #opened #today #retail #investors #wait #subscribe