RITES Ltd shares dropped as much as 5.7% in intra-day trade on Thursday as the offer for sale (OFS) opened for subscription earlier in the day.
At 11:28 am, RITES shares were trading at Rs 301.55, down 5.2%, after hitting the day’s low of Rs 300. Notably, the stock has jumped by a whopping 65% in the last one year compared with an 8% rise in the benchmark Nifty 50 index.
RITES, in a stock exchange notification on Wednesday, said the railways ministry has proposed to sell up to 1.25 crore equity shares of the company, representing 5% of the total issued and paid-up equity share capital. The OFS will open for non-retail investors on 27 February and for retail investors on 28 February.
In case of oversubscription, the government may also exercise the option to sell up to an additional 1.25 crore shares, taking the total issue size to 10%.
The RITES stock has taken a hit as the floor price for the OFS has been fixed at Rs 298 per share, which is nearly 6.3% lower than Wednesday’s closing price of Rs 318. An additional discount of Rs 8 per share is also being offered to retail investors.
RITES has also reserved a total of 50 lakh shares for retail investors, which includes 25 lakh shares from the base offer and another 25 lakh shares in case the oversubscription option is exercised.
The government currently holds 77.39% stake in RITES. After the OFS, the company would become compliant with minimum public shareholding requirements as mandated by market regulator Securities and Exchange Board of India (Sebi).