IRFC OFS Opens for Retail Investors: Apply Fast or Stay Away?

Retail investors in the Indian stock market are facing the Indian Railway Finance Corporation (IRFC) Offer for Sale (OFS), which has just launched. The IRFC OFS has launched just as the government begins its rail PSU stake sell-off. We’ll examine the details of the OFS from IRFC, which includes the changes in the IRFC share price and new developments in other railway PSUs. The news regarding the IRFC presents numerous challenges and opportunities that will be analysed in detail.

What is IRFC and what is the Current Buzz Around it?

IRFC, or the Indian Railway Finance Corporation, is one of the central bodies that funds Indian Railways. Being a public sector undertaking (PSU), the IRFC has started borrowing from both domestic and international markets. Since it was established in 1986, it has essentially been the Ministry of Railways' borrowing arm for financing rolling stock and other railway assets, including locomotives. Because of its sovereign backing, IRFC has low operational risks and stable revenues.

The attention this time is on the IRFC OFS. The government, via the Ministry of Railways, issued an Offer for Sale to offload an initial 2% stake, with a potential greenshoe of 2%, for an estimated ₹5,430 crore, based on a floor price of ₹104 per share. The non-retail window opened on February 25, 2026, and then opened the next day for retail. Reports suggest that a lack of interest from institutional investors has, so far, caused the government to skip the greenshoe. So, for retail investors in the IRFC OFS, will you apply?, or, will you not?

The update regarding the IRFC share offering comes when the news on railway PSU stocks is largely centred on infrastructure development and government disinvestment. With the modernisation of the railway sector in India, which includes the Vande Bharat and planned high-speed rail, the IRFC is crucial. The stock has been struggling, declining to a 52-week low of about ₹104, which is a 17% decline year-to-date in 2026.

Let's understand the subtle details to determine whether this OFS is a potential opportunity or risk to investors.

What is an Offer for Sale (OFS)?

Before we look at IRFC OFS, we need to explain what OFS is first. An Offer for Sale is a method that allows promoters (in this case, the Government) to sell shares via the stock exchange. An OFS is in contrast to an IPO, where new shares are issued. An OFS involves existing shares or old shares, allowing large stakeholders to exit their positions without affecting the company’s capital.

OFS trades happen in a maximum of two days. One day is for the large non-retail investors, and then the next day is for retail investors. Every bidder has to list the bid at or above the floor price, and in this case, retail investors are allocated 10% of the shares. If you look at the IRFC case, it was more or less the same: No retail discount was offered, so every bidder was at that same ₹104 floor price, which was the same as what the institutions had to pay. This has been the most controversial part of the IRFC offer for sale news, as it does not incentivise retail buyers.

In the past, the government has employed OFS to achieve divestment goals and satisfy the norms that require a certain level of public shareholding. For the investors, there is an opportunity to buy shares possibly at a lower rate than the market price. However, the outcome is contingent on demand and market sentiment.

Important Details about the OFS of IRFC

Now we get to the specifics of the IRFC share sale. In this OFS, over 26.13 crore shares (2% stake) were to be sold initially, with a possibility of another equal amount. The floor price was set at ₹104, which was 5% lesser than the closing price on the day of announcement, but was at the level of the prevailing market price during the offer.

• Schedule: Non-retail participants can bid on 25th February 2026, between 9:15 AM and 3:30 PM IST, while retail participants can bid on 26th February 2026, during the same hours.
• Quotas: 10% for retail participants means about 3.79 crore shares.
• Bidding Procedure: The retail investors can place bids through their brokers, and the minimum bid was set at ₹2 lakh, with increments of multiples thereafter.

Results– The response from institutions was rather uneventful, considering that their response was 94.98% of the total amount of the shares. The government had no choice but to reserve 2% of the sale.

The latest news from IRFC has brought attention to the fact that the stock has been underperforming and that the markets have been volatile. Just recently, IRFC has also secured 400 million dollars from External Commercial Borrowings (ECB) in Yen, which is to be used to finance the railway projects.

What is the IRFC Financial position?

Determining whether retail investors of IRFC OFS will be entering the market involves looking at the company's fundamentals. Retail financing is relatively new in our market. IRFC facilitates financing of the railways, which is the reason why it has NBFC licenses. Furthermore, the company has no historical record of non-performing assets (NPAs), which means that the company has received KYC/AML anti-money laundering clearances.

IRFC achieved a profit of 1,802 crore rupees in Q3 FY2026, which is 10.51% more than that of the previous year. From the assets under management (AUM) amounting to 4.75 lakh crore and NIM, there has been an increase of 1.51% which is also the highest in a period of 3 years. The latest quarter profit was 271.52 billion rupee which is larger than that of the previous years; gross profit was only 24.53%.

IRFC's long-term performance shows its ability to be a multibagger stock. In the last 3-5 years, they have seen returns of 275% and 318%, respectively. In 2026, though, they have seen a Year-to-Date decline of 17% and an annual return of roughly 15%. The stock's Price-to-Earnings (P/E) ratio is around its historical averages; however, recent dips have caused it to trade at a discount to its historical averages.

IRFC is progressing under its ‘IRFC 2.0’ plan. Moving from a one-client model (Ministry of Railways) to a multi-client model that fosters collaboration across different infrastructure sectors. This diversification will be valuable, especially with the twenty-six budgetary allocation to the railways of ₹2.015 trillion.

Benefits of Investing in IRFC OFS for Retail Investors

IRFC OFS retail investors will have the following benefits:

1. Stable Risk and Profitability: The IRFC is a government-backed business and thus has a zero NPA record and is a safe investment in flipped markets.

2. Positive Outlook for Railway Sector: The IRFC’s loan book will grow with the modernisation of India’s railways (electrification and new high-speed corridors). Increased government capex is expected to allow for meaningful premium valuations.

3. Valuable Touchpoint: A floor price of ₹104 is close to the 52-week low, this could mean potential value to long-term holders. If the market becomes positive, the post-OFS stability could bring some value.

4. Dividend Certainty: EPS at 5.36 TTM is favourable to IRFC's consistent dividend payouts, which are appreciated by investors looking to gain income.

The OFS is viewed as a strategic entry, particularly for investors willing to stand the short-term volatility.

Cons and Risks: Why Some Investors May Choose to Avoid

The news has not all been positive, and there are downsides to PSUs' IRFC. The downsides include:

1. No Retail Discount: With OFS, there is no retail pricing, meaning less "margin of safety." The pricing volatility is unattractive with a 5% discount off the pre-announcement prices.

2. Market Reaction: Retail investors were particularly optimistic about the offer for sale, leading to the market's muted response. They seem to believe that the oversubscription (in this case, reliance on higher demand) would allow post-offer for sale (OFS) stock prices to trade higher. It appears that the market would take the stock price down post-OFS even if there is an oversubscription.

3. Stock Price Declines: The stock price of IRFC has already shown such volatility, previously dropping 4.43%, closing at 104.55 on 25th February. Future government sell-offs may also lead to price suppression due to demand falling suddenly.

4. Market Considerations: Any changes to the government’s budget will also change how the railway sector will spend, impacting how the railway sector will spend and therefore how the IRFC will make profits. Overall, there will be some quarters where some profits will be made and in some quarters, there will be none.

Conclusion

Overall, IRFC offers for sale news exemplifies how there is an opportunity and risk to be taken when dealing with railway PSU stock news. It is advisable to closely watch the most recent news on IRFC, review your current position, and get in touch with your stock market advisor. Investors who apply the most activity, along with taking a cautious approach, will make the most appropriate decisions in this stock market situation.

DISCLAIMER: This blog is NOT any buy or sell recommendation. No investment or trading advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.