Mumbai: Indian Railway Catering and Tourism Corporation (IRCTC) made a stellar debut on stock markets on Monday. The stock was listed at 644 apiece, a premium to its issue of 320 per share. The 645 crore initial public offering (IPO) was subscribed 112 times at a price band of 315- 320 per share. The issue was open for subscription between 30 September and 4 October.

At 10 am, the stock was trading at 652.15 on BSE, up 103.80% from its issue price.

In the last two financial years, IRCTC had clocked 10.3% annual growth, with revenues rising to 1,868 crore in the fiscal 2019. However, its profit after tax margins fell to 13.9% in FY19 from 14.3% in FY17 on higher expenses.

The company has high return ratios with return on capital employed (RoCE) and return on equity (RoE) of 25% with dividend payouts of more than 40% of net profits, over the past two years, higher than the regulatory norm of 30%. Healthy cash balances (more than the networth of the company) provides comfort against business uncertainties, said analysts.

"Based on FY19 consolidated numbers, the issue is priced at a price to earnings (PE) of 19 times. The company is likely to benefit from monopolistic nature of business, significant growth over FY19-21, an asset-light business model with healthy dividend payouts, and strong parentage," said Motilal Oswal Financial Services Ltd in a 28 September

IRCTC is a government-run company and only entity authorised by Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India.

Currently, IRCTC operates in four business segments -- internet ticketing, catering, packaged drinking water under the Rail Neer brand and travel and tourism. IRCTC has also diversified into other businesses, including non-railway catering and services such as e-catering, executive lounges and budget hotels. Catering services contributed 55% to FY19 revenues, internet ticketing contributed 12%, packaged drinking water 9%, while travel and tourism business contributed 24%. to offer Indian Railways' ticket online.

Irctc.com is one of the largest websites and sees 7 million logins per day. From 1 September, the company has reinstated the convenience fee in the range of 10-30 per booking on its web and mobile platforms. Since, IRCTC handles 2.5 crore transactions a month, this has an incremental revenue potential in the range of 300-900 crore, which according to the management, the majority of revenues are likely to flow to the bottom-line.

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