IRFC OFS Opens: Should Retail Investors Buy?

The Indian Railway Finance Corporation (IRFC) is set to open its offer for sale (OFS) to retail investors today, February 26. This comes after the OFS failed to fully subscribe with institutional buyers, raising questions about its attractiveness for individual investors. The multibagger PSU stock had a total OFS value of ₹5,430 crore, with bids reaching ₹2,326 crore on the first day at an indicative price of ₹104.12 per share.

While the floor price for the offer is ₹104, analysts express concerns that this price does not present any substantial discount compared to the current market levels. Additionally, the government’s plan to divest further shares could exert more selling pressure in the future. As of the latest trading session, IRFC’s stock closed at ₹104.56, showing a decrease of 4.46% and a significant drop of 17% since the beginning of 2026.

Despite these short-term pressures, IRFC has demonstrated strong long-term performance, boasting multibagger returns of 275% and 318% over three and five years, respectively. The company reported a record net profit of ₹1,802 crore in Q3 and its Assets Under Management (AUM) reached ₹4.75 lakh crore. Analysts believe that the OFS is more of a regulatory requirement rather than a compelling market event, given that public shareholding in IRFC needs to exceed 25% as per SEBI norms.

Vinit Bolinjkar, Head of Research at Ventura, mentioned that retail investors should approach this OFS with pragmatism, as it offers no specific retail discount, thereby reducing the "margin of safety" compared to buying shares directly from the secondary market. He advises against pursuing quick listing gains through this OFS, suggesting that investors should instead consider accumulating shares for long-term benefits, especially given IRFC's vital role in supporting India’s extensive railway infrastructure.

IRFC is also undergoing a strategic evolution with its IRFC 2.0 plan, shifting from a traditional one-client model to a multi-client approach to better serve the broader railway ecosystem. This diversification aims for a 60:40 revenue split by FY30, which could enhance its Net Interest Margin (NIM) and sustain its Zero NPA record. If successful, IRFC could emerge as a stable long-term investment option.

In conclusion, while there are concerns regarding the current OFS and its implications for retail investors, the underlying fundamentals of IRFC remain strong. Those looking for immediate gains might find better opportunities in the secondary market once the initial volatility of the OFS settles. Investors should carefully weigh their options before making any decisions.