The much-awaited IPO of PSU Rail Vikas Nigam Ltd finally opens today. The Rs 481 crore -IPO of RVNL is offering 25.34 crore shares at a price band of Rs 17-19 per share. The issue is an offer-for-sale or OFS which will close on April 3. Post this IPO, the government’s stake will reduce to 88% after diluting its stake of 12.2% in the rail PSU.
Of the total issue, 0.3 per cent, or 6,57,280 shares have been reserved for the employees of RVNL. Both retail investors and employees will get a discount of Rs 0.5 per share. The investors will have to apply for a minimum of 780 shares and multiples thereof.
With the government’s focus on rail infrastructure spends (metro, port-rail connectivity, electrification etc), healthy order book, asset-light model and reasonable valuation, the brokerage house Centrum Broking has recommended – “Subscribe to the issue from a long-term perspective” to the investors.
As on December 31, RVNL’s order book stood at Rs 77,504 crore, which includes 102 ongoing projects. In FY18, its revenue from operations on a consolidated basis stood at Rs 7,597 crore and net profit at Rs 570 crore, with earnings before interest, tax, depreciation and amortization (EBITDA), margin of 5.1%. The company’s revenue from operations surged at a CAGR of 29.36% from FY16 to FY18. During the same period, the net profit rose at a CAGR of 15.20%.
RVNL was incorporated as a wholly-owned PSU of Ministry of Railways in 2003 with the twin objectives of raising extra-budgetary resources and implementation of projects relating to creation and augmentation of capacity of rail infrastructure on a fast track basis. It became fully operational by March 2005. It is empowered to act as an umbrella SPV to undertake project development, resource mobilization etc. directly or by creating project specific SPVs or by any other financing structure found suitable.