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The RailTel IPO closes on Thursday
The RailTel IPO closes on Thursday

RailTel IPO subscribed 2.6 times on Day-1 led by retail investors

  • The issue received bids for 16.14 crore equity shares against the offer size of over 6.11 crore shares, according to the data available on the exchanges
  • RailTel had on Monday raised 243.99 crore from 14 anchor investors

Mumbai: The Rs819 crore initial public offer of state-run RailTel Corporation of India was subscribed 2.64 times on Tuesday, the first day of the bidding process, as retail investors rushed to subscribe to the offering.

The issue received bids for 16.14 crore equity shares against the offer size of over 6.11 crore shares, according to the data available on the exchanges. The IPO closes on Thursday.

The retail investors portion was subscribed 4.99 times. The non-institutional investor was subscribed 75%, while qualified institutional buyers have not put in their bids yet.

RailTel had on Monday raised 243.99 crore from 14 anchor investors. Foreign portfolio investors who participated in the anchor allotment included UK-based Aurigin Capital via its Aurigin Master Fund and Utilico Emerging Markets Trust, Reliance Capital managed Cohesion MK Best Ideas Sub-Trust, Singapore-based Integrated Core Strategies Asia and Goldman Sachs India.

The IPO is an offer-for-sale through which the government will offload 87.15 million equity shares, or 27.16% stake. The objective of the issue is to divest government's stake, the company will not get any proceeds from the offer.

"At the upper price band of Rs.94, RailTel is available at a price to equity of 21.4 times on FY20 basis, which appears fully priced. Considering, increasing data usage, GoI’s digital India initiatives and further diversification plans of RailTel", said Geojit Financial Services.

Analysts at Angel Broking in an IPO note said RailTel is going to play a key role in digital transformation of Indian Railways.

"RailTel’s margins & return ratios are better compared to other telecom players in India and has a strong financial position (debt free) and has been consistently paying dividends since 2008. There are no listed peers for the Company and it is priced at 21.4 times price equity on a FY20 trailing basis. We are positive on the long term prospects of the industry as well the Company."

Meanwhile, the initial public offer of Nureca was subscribed 14.92 times on the second day of bidding. Retail portion was subscribed 81.13 times.

Gujarat based agrochemical company Heranba Industries' initial public offer opens for subscription on February 23 and closes on February 25 at a price band of Rs. 626 to Rs. 627 per equity share to raise 625 crore.

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