General Trading Chat

Govt is diluting its stake in IRCTC via OFS route.

They have floated the RFP for inviting bids for the same from merchant bankers et al.

Last date of this RFP was today i.e. 14th Sept.

Will the selected bidder & its bids determine the OFS price?

When will the OFS price become public?

Such simple questions should not be such a "mystery". It happens only in India?
 

siddhant4u

Well-Unknown Member
Govt is diluting its stake in IRCTC via OFS route.

They have floated the RFP for inviting bids for the same from merchant bankers et al.

Last date of this RFP was today i.e. 14th Sept.

Will the selected bidder & its bids determine the OFS price?

When will the OFS price become public?

Such simple questions should not be such a "mystery". It happens only in India?
Govt is planning to offload 15-20% of its stack in irctc. Its not possible for indian public to decide on price nor they could absorb ofs of this size.
Its standard practice and nothing wrong with it.
 

siddhant4u

Well-Unknown Member
Nothing wrong with OFS I understand.
But when will the OFS price be known?
Or is 'keeping it hidden till last moment' part of standard practice too?
Date was extended to 14th that could mean not many Were interested or no one agreed on price. remember, last time govt sold for 300 odd rs per share. Its highly priced already, so ofs will be in discount for sure.

I assume once bankers decide on price, it will be listed on nse for all to bud and see the progress like BDL or dmart.
 
Date was extended to 14th that could mean not many Were interested or no one agreed on price. remember, last time govt sold for 300 odd rs per share. Its highly priced already, so ofs will be in discount for sure.

I assume once bankers decide on price, it will be listed on nse for all to bud and see the progress like BDL or dmart.
So OFS for all purposes is just like IPO then? Appoint merchant banker, determine price band, and then invite bids?
It is definitely different in some way.

PS: 300 odd was IPO price which was very low inddded. Market discovered its worth to be 2000 before lockcown. Now it is at 1300. Excellent FY20 results had no impact. Bad Q1 (2020-21) results had no impact. For fulfilling immediate money requirement of Govt (or some other mysterious or manipulative reason), OFS may be at discount (not sure) but whether 1300 is overpriced or underpriced is debatable. Please educate & elucidate if you can.

PS2: Having two prices for same thing is fundamentally flawed anyway. I dont think it will be a "standard practice" anywhere else in the world.
 

siddhant4u

Well-Unknown Member
So OFS for all purposes is just like IPO then? Appoint merchant banker, determine price band, and then invite bids?
It is definitely different in some way.

PS: 300 odd was IPO price which was very low inddded. Market discovered its worth to be 2000 before lockcown. Now it is at 1300. Excellent FY20 results had no impact. Bad Q1 (2020-21) results had no impact. For fulfilling immediate money requirement of Govt (or some other mysterious or manipulative reason), OFS may be at discount (not sure) but whether 1300 is overpriced or underpriced is debatable. Please educate & elucidate if you can.

PS2: Having two prices for same thing is fundamentally flawed anyway. I dont think it will be a "standard practice" anywhere else in the world.
yes, its somewhat like IPO, once merchant bankers agree on price bids will be invited. I assume just like IPO advising banks will underwrite the OFS. Price 'discovered' on listing day was around 600 odd. rest is speculation. Not sure if its overpriced yet, my calculations were based on PE ratio only. Plus past decades of data where govt owned companies always go down over period. If you see the latest data, catering biz contributes 45% of profit! post-covid, no one is sure if public will eat out or not.

Govt could start charging fees for renting out premises for ticket windows, food stall etc in near future...

coming back to OFS, there won't be two prices, it's just that it will be discounted by 10-15% max to current market price. No one would buy something in bulk at market price or higher if its already available in market.
 
yes, its somewhat like IPO, once merchant bankers agree on price bids will be invited. I assume just like IPO advising banks will underwrite the OFS. Price 'discovered' on listing day was around 600 odd. rest is speculation. Not sure if its overpriced yet, my calculations were based on PE ratio only. Plus past decades of data where govt owned companies always go down over period. If you see the latest data, catering biz contributes 45% of profit! post-covid, no one is sure if public will eat out or not.

Govt could start charging fees for renting out premises for ticket windows, food stall etc in near future...

coming back to OFS, there won't be two prices, it's just that it will be discounted by 10-15% max to current market price. No one would buy something in bulk at market price or higher if its already available in market.
Yes there will not be two prices except for a moment. The higher & lower will adjust to one price in a finger snap. Or may be it will be 5 minutes. I dont exactly know but I did not mean that two prices will continue after OFS.

What I am saying it:

One price is already discovered & being traded at.

At the most, the seller can say that "if there is someone ready to do a bulk purchase of such & such volume, I am ready to sell at such & such discount".

If thatI s what an OFS is, I dont think it should impact the market price in significant way (because discounts on bulk purchases are normal & natural).

However,

There might be a negative impact if the the discount is HUGE and still there are NO buyers.

On the other hand,

There will be a positive impact if discount is LITTLE and purchasers are lined-up

In either case, OFS price cannot be higher than market price.

And lower OFS price does not necessarily mean negative impact on market price.

That is my understanding.

Expert like you may please throw some more light on the above.
 
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