BackRailTel IPO subscribed 2.6 times on Day 1: 10 things to know
RailTel IPO is is entirely an offer-for-saleThe government will sell 87.15 million shares, or a 27.16% stake in this issue
PremiumThe IPO of RailTel Corporation of India opened for subscription today to strong demand and the issue was oversubscribed in first few hours. The state-run company has fixed a price band of ₹93-94 a share for its initial share-sale. RailTel IPO will close on February 18. RailTel, which provides broadband telecom and multimedia network across the country, is one of the largest neutral telecom infrastructure providers in the country owning a pan-India optic fiber network on exclusive Right of Way (ROW) along Railway track.
At end of Day 1, RailTel IPO was 2.64 times subscribed.
"Strong demand from retail investors led to full subscription of RailTel IPO within the first few hours on day1. Similar demand expected from HNI and QIB investors on day2&3," Secretary of Department of Investment and Public Asset Management said in a tweet.
Here are 10 things to know about RailTel IPO:
1) The lot size in RailTel IPO is 155 and at the upper price band of ₹94, the application money will be ₹14,570
2) According to brokerages, the share allocation in RailTel IPO is likely to be finalised on February 23 and listing may happen on February 26.
3) ICICI Securities, IDBI Capital, SBI Capital Markets are merchant bankers to the issue.
4) The initial public offer (IPO) is entirely an offer-for-sale. Thus company will not receive any fund from the IPO.
5) The government will sell 87.15 million shares, or a 27.16% stake in this issue. The government plans to raise a little ₹819 crore.
6) Half of the issue is reserved for qualified institutional buyers, 35% for retail investors, 15% for non-institutional bidders.
7) KFin Technologies Private Limited is the registrar of RailTel IPO and will manage share allocation and refund.
8) For the year ending March 2020, the company had reported a net profit of ₹141 crore as compared to ₹135 crore in the previous fiscal.
9) The risk includes unfavorable government policies and regulations, lower spending from governments and competition from private operators.
10) "RailTel has reported a stable financial performance over FY18-20. It reported a 7.5% CAGR rise in top-line to ₹1,128 crore in FY20. Business from telecom services, which contributed around 67.7% to the top-line increased by 4.3% CAGR, while business from projects (contributing average 30.9%) increased by 13.8% CAGR during FY18-20," Choice Broking said in a note. The brokerage has a subscribe rating on the issue.
"RailTel is profitable since FY07 and paid dividend since FY08. Average dividend payout stood at around 40% over FY18-20. Networth is positive and consistently growing since incorporation. The company is net debt free and is funding its operations with internal accruals since FY13."
"There are no listed peers, having similar operating model. At the higher price band of Rs. 94 per share, the company’s share is valued at a FY20 P/E multiple of 15.8x (to its restated EPS of Rs. 5.9)," it added.
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