IRCTC IPO subscribed 80% on Day 1, robust demand from retail investors

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Updated: Sep 30, 2019 5:08 PM

Railway PSU Indian Railway Catering and Tourism Corporation (IRCTC) IPO saw robust demand and was subscribed 80% as at the end of first day of bidding.

IRCTC IPO will remain open for subscription between September 30th and October 3rd.

Railway PSU Indian Railway Catering and Tourism Corporation (IRCTC) IPO saw robust demand and was subscribed 80% as at the end of first day of bidding. The Rs 645 crore issue saw bids for 1.62 crore shares, as against the total issue size for 2.01 crore, implying a subscription of 80 per cent. The retail investor category saw bids for more than 2 times the issue size, while NII’s bid for more than 15% of the portion reserved for them. The employee category received bids for 1.11 times their reserved portion. IRCTC IPO will remain open for subscription between September 30th and October 3rd. Through the IRCTC IPO, the government looks to raise up to Rs 645.12 crore at the higher end of the price band.

Also read: Sensex falls over 150 points, Nifty below 11,500; key reasons

The railway PSU has set a price band of Rs 315-320 for its intended stock sale. IRCTC is offering a discount of Rs 10 per share to retail investors and employees. The minimum bid lot has been fixed at 40 shares, and in multiples of 40 shares thereafter. IRCTC IPO is a complete offer for sale of 2 crore shares (representing 12.50 percent of total paid-up equity) by the Ministry of Railways. The firm said that there would also be additional employee reservation portion of 1.6 lakh shares, taking the total offer size to 12.6% of total paid-up equity.

According to brokerage firm IndiaNivesh, IRCTC enjoys monopoly business in online rail ticket booking and food catering on running trains. “Mobile application based food ordering is gaining fast traction among travellers. It provides multiple caterers in tune with today’s taste and preferences of commuters,” said the research firm. IRCTC has strong fundamentals and debt free balance sheet along with decent return ratios, noted the firm. Taking stock of the valuations, IndiaNivesh said that RCTC IPO looks conservatively priced at a PE ratio of around 19x based on FY19 earnings.

Brokerage firm Anand Rathi said that the firm has a unique business model and the company does not have any competition across any business segment. “Based on various parameters like strong earnings profile, diversified business segment, healthy return ratio, debt free status and most importantly monopoly business, we have a positive view on the issue,” the firm noted. At the upper price band of Rs 320, the stock is available at PE multiple of 18.8x to its FY19 EPS of Rs 17, the brokerage firm said in IRCTC IPO note.

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