Shares of Indian Railway Finance Corporation (IRFC) came under sharp selling pressure on Wednesday, falling more than 4 percent to a fresh 52 week low after the government initiated an Offer for Sale (OFS) to divest part of its holding. The stock declined to around Rs 104.82 on the NSE, extending losses seen over the previous session and reflecting investor caution ahead of a large equity supply hitting the market.

The government currently holds 86.36 percent stake in the railway financing arm and plans to reduce this to about 82.36 percent through the sale. The OFS structure includes a base offer of 2 percent equity with an additional 2 percent green shoe option, allowing the government to sell more shares if demand is strong. At the indicated floor price of Rs 104 per share, the divestment could raise roughly Rs 5,430 crore.

According to official communication, the offer opened first for institutional and non retail investors on Wednesday, with retail participation scheduled for the following day. The sale involves up to 26.13 crore shares initially, with the possibility of doubling that quantity under the green shoe provision. Details were disclosed through regulatory filings available on the company’s official platform at https://www.irfc.co.in.

IRFC plays a critical role in financing the capital expenditure of Indian Railways by raising funds from domestic and international markets and lending them to the national transporter. Because of this quasi sovereign status, the company has historically been viewed as a low risk, stable yield PSU with strong government backing. However, the same ownership structure also makes it a frequent candidate for disinvestment as part of the government’s asset monetisation strategy.

The immediate trigger for the price fall is not deterioration in business fundamentals but the classic supply overhang associated with large stake sales. When a significant block of shares is offered at a fixed floor price, market participants often adjust their bids downward toward that level, leading to short term price pressure. The fact that the floor price is close to the stock’s prevailing market price further amplifies this effect.