RITES shares tumble 6% as OFS opens for non-retail investors

Topics Buzzing stocks | Markets | Rites

Shares of state-owned RITES slipped 6 per cent to Rs 300 on the BSE on Thursday in early morning trade as the government's proposed sale of up to 10 per cent stake in the company at Rs 298 per share through an offer-for-sale (OFS) begins today. The OFS price is at a discount of 6 per cent to Wednesday's close of Rs 318.

In an exchange filing after market hours on Wednesday, RITES said that the President of India, acting through Ministry of Railways, Government of India has proposed to sell its stake in the company.

The seller proposes to sell up to 12.5 million equity shares, in aggregate representing 5% of the total issued and paid-up equity share capital of the Company on February 27, 2020 (for non-retail investors only) and on February 28, 2020 (for retail investors and for non-retail investors who choose to carry forward their un-allotted bids), with an option to additionally sell up to 12.5 million equity shares, RITES said in an exchange filing.

The company said the offer was "being undertaken by the Seller for achieving the minimum public shareholding of the Company" as per the Sebi norms.

Earlier, in November 2019, the Finance Ministry had collected Rs 729.44 crore from divestment of 10 per cent stake, or 25 million equity shares, in RITES through the OFS route.

As of December 2019, the government held 77.39 per cent stake in the railway engineering consultancy company, shareholding pattern data shows.

In the past three months, the stock has outperformed the market by surging 13 per cent, as compared to 3 per cent decline in the S&P BSE Sensex till Wednesday. It hit an all-time high of Rs 331 on January 29, 2020.

RITES is a public sector enterprise and a leading player in the transport consultancy and engineering sector in India, having diversified services and geographical reach. The government's stake in RITES stood at 77.39 per cent as on 30 December 2019.

At 9:50 AM, the stock was trading 5.2 per cent lower at Rs 301.55 as compared to 0.72 per cent decline in the benchmark S&P BSE Sensex. Around 590,000 shares have changed hands on the NSE and BSE combined so far.

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