IRCTC IPO subscribed over 110 times2 min read . Updated: 03 Oct 2019, 05:03 PM IST
- Many brokerages have recommended subscribe to IRCTC IPO, citing attractive valuations
- IRCTC IPO has attracted strong retail demand
IRCTC IPO, which opened for subscription on Monday, closes today. Till 4:45 pm today, IRCTC IPO was subscribed 111.78 times, with retail investor segment seeing strong demand. The government is offering 2 crore equity shares or 12.6% stake through this IPO. Post-IPO, the government's stake will fall to 87.4%. The strong demand has been attributed to "reasonable valuation" at which IRCTC shares are being offered. Many analysts have recommended "subscribe" to IRCTC IPO, citing attractive valuation and the company's monopoly position in providing packaged drinking water, catering, online ticket booking services to passengers travelling by Indian Railways.
IRCTC is offering shares at ₹315-320 per share but retail investors get a discount of ₹10 per share. So the effective price band of IRCTC IPO for retail investors is ₹305-310 per share. Alankit Assignments Limited is the registrar to the IRCTC IPO.
IRCTC is also venturing as a private train operator as the Railways opens key routes to private operators. In FY19, IRCTC reported a net profit of ₹272.6 crore on revenues of ₹1,867 crore.
The lot size of IRCTC IPO is 40. So at the price band of ₹305-310 per share for retail investors, one lot will cost ₹12,200-12,400.
IRCTC IPO allotment date and listing date
Allotment date: 9 October (tentative).
Listing on BSE and NSE: 14th October (tentative)
What brokerages say
During FY17-19, IRCTC’s revenue and PAT clocked 10% and 9% CAGR, respectively while the average EBITDA and net margin stood at 20% and 15%, respectively during FY17-19, says Reliance Securities, which has a subscribe rating to the issue. "It has healthy balance sheet with ₹1,100 crore cash to support capex. IRCTC has good dividend pay-out track record, as it made 50% average payout in the last 3 years," the brokerage added.
The Railways has restored convenience for e-ticket from September 19, which was discontinued for some time. With an average monthly 25 million ticket booking, this is likely to generate additional annual revenue of ₹450 crore for IRCTC, says the brokerage.
Many other brokerages such as SAMCO Securities, ICICI Securities, Angel Broking, Canara Securities and Prabhudas Lilladher have recommended a subscribe to IRCTC IPO, citing attractive valuation and its monopolistic nature of the business and asset light model.
A change in policy of Ministry of Railways could impact the financials of IRCTC while competition could pose a risk to its monopoly position, say analysts.