RITES slips 3% as govt's stake sale via offer for sale opens today

Topics Buzzing stocks | Rites Ltd | Rites

Shares of state-owned RITES slipped 3.4 per cent to Rs 295.35 apiece on the BSE on Friday after the government announced to sell up to 15 per cent of its holding in the railways' firm, at a discounted price of Rs 293.5 per share via offer for sale (OFS) route. The sale would fetch the government Rs 1,100.6 crore. 

"In a bid to meet the Securities and Exchange Board of India's (Sebi's) requirement of minimum shareholding, the government intends to sell up to 25 million shares, representing 10 per cent of the company's capital, to non-retail investors on November 22," the company informed the exchanges in a regulatory filing. READ FILING HERE

Those retail and non-retail investors, who choose to carry forwards their unalloted bids, would be allowed to buy on November 25. It further added that the government could sell additional 12.5 million shares, representing 5 per cent, of the capital. 

The floor price of Rs 293.5 is at a 4 per cent discount to Thursday's close of Rs 305.85. With this, the government’s stake in RITES may fall to 72.4 per cent from 87.4 per cent currently.

"The allocation shall be made at or above the floor price on price priority basis at mutliple clearing prices, expect for retail investors, who would have an option to bid at the 'Cut-Off' price, and or whom the final allocation price may be below the floor price," the filing said.

At 10:17 AM, the stock was trading 3.04 per cent lower at Rs 296.55, as againt a 0.33 per cent decline in the benchmark S&P BSE Sensex. So far in 2019, the counter has outperformed the benchmark index by surging nearly 40 per cent. In comparison, the benchmark was up 12.4 per cent during the same period.

For the quarter ended September 2019, the company logged a two-fold rise in consolidated profit at Rs 237.21 crore on a year-on-year (YoY) basis. The consolidated total revenue increased to Rs 887.86 crore in the July-September period as against Rs 477.73 crore in the year-ago period.  

RITES is a leading player in transport consultancy and engineering sector in India, having diversified services and geographical reach. It is the only export arm of Indian Railways for providing rolling stock overseas (other than Thailand, Malaysia and Indonesia).

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