New Delhi: The share prices of Indian Railway Catering and Tourism Corp (IRCTC) fell down by 8 per cent on Thursday, after the Union Government announced to sell up to 20 per cent of the stake in the company through an offer for sale (OFS). ALSO READ | BSE Sensex Zooms 495 To Cross 46K-Mark For The First Time Ever, Nifty Tops 13,500

After the announcement, IRCTC shares on Thursday traded for Rs 1481.50, lower by Rs 136.55 or 8.44 per cent from its previous close on the Bombay Stock Exchange (BSE). On Wednesday, the shares traded for Rs 1,618.05 a piece, which was down by 1.55 per cent from the price on Tuesday.

According to the Department of Investment and Public Asset Management (DIPAM), the union government will be selling up to 2,40,00,000 equity shares, which makes up around 15 per cent of stake in the IRCTC with an option to additionally divest five per cent of the total issued and paid-up equity share capital, adding up to 80,00,000 shares.

"Offer for Sale in IRCTC opens tomorrow for Non Retail investors. Day2 for retail investors. Govt. would divest 15 per cent equity with a 5 per cent greenshoe option," tweeted Secretary, DIPAM on Wednesday.

Why The Government Is Disinvesting In IRCTC?

The central government owns an 87.40 per cent stake in IRCTC and is selling its equity shares to lower its stake in the company to 75 per cent.

The move of disinvestment comes in order to meet the Securities and Exchange Board of India’s public holding norm.

How Much Money Govt Expects To Raise & Where It Will Be Used?

According to sources, the minimum price per share for the offer stands at Rs 1,367. The Narendra Modi-led government is expected to raise Rs 4,374 crores by selling around 3.2 crore shares.

The money raised from the sale of stake will be used to help improve government’s treasury starved of funds, due to the Covid-19 crisis.

Govt's Disinvestment Target

The Central Government has planned to raise Rs 2.10 lakh crore by disinvesting from different public sector undertakings, financial institutions, public enterprises and ventures. The sum raised by the sale of IRCTC’s stake will be added to the figure.

As part of the disinvestment plan, the Central Government plans to raise Rs 1.20 lakh crore from the disinvestment of public sector undertakings and Rs 90,000 crore from stake sales in financial institutions.

ALSO READ | Burger King IPO: What US-based Fast-Food Major’s India Unit Listing Means For Investors?

IRCTC raised a sum of Rs 645 crores through an Initial Public Offering (IPO) last year. The firm provides catering services, online railway ticket service and packaged drinking water at railway stations and trains in India.