Govt Set To Offload Stakes In IRFC, Mazagon Dock Other PSUs In FY25: Report

The government is reportedly likely to sell small stakes in certain state-run companies, including Mazagon Dock Shipbuilders, Indian Railway Finance Corp (IRFC), National Fertilizers Ltd (NFL) and Rashtriya Chemicals and Fertilizers Ltd (RCF) in the current fiscal year.

What Happened: The government is planning to divest small stakes in select public sector undertakings (PSUs) in the rail, fertiliser and defence sectors through an offer for sale (OFS) in the current fiscal year, Moneycontrol reported, citing a senior government official.

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Although the Union Budget 2024 is not expected to set a fixed disinvestment target, it is anticipated to target non-debt capital receipts worth ₹50,000 crore. The government is expected to dilute its 11.36% stake in IRFC, which could bring in around ₹7,600 crore. The government currently holds an 86.36% stake in the financing arm of the Indian Railways.

The Finance Ministry is said to be aiming to sell up to a 10% stake in Mazagon Dock, in which the government holds an 84.83% stake. The Department of Investment and Public Asset Management (DIPAM) is reportedly aiming to sell 10% of RCF and 20% of NFL, which could be worth around ₹1,200 crore.

Why It Matters: The government’s decision to sell stakes in these PSUs is part of its broader strategy to raise funds and reduce fiscal deficit. The proceeds from the stake sale will likely be used to fund various government schemes and initiatives.

The move is also expected to improve the financial health of these companies by bringing in private investment and enhancing operational efficiency. However, the success of this disinvestment drive will largely depend on market conditions and investor sentiment.

Price Action: Most of these PSU stocks were trading higher on Friday afternoon.

Shares of IRFC were 0.49% up at ₹174.0.

Shares of Mazagon Dock Shipbuilders were down 2.98% at ₹4,284.55.

Shares of NFL were up 2.23% at ₹129.90.

Shares of RCF were up 2.31% at ₹189.60.

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