IRCTC IPO Raises 11,062% More Money Than Expected; Hailed As Biggest IPO In 20 years!

IRCTC IPO Raises 11,062% More Money Than Expected; Hailed As Biggest IPO In 20 years!
IRCTC IPO Raises 11,062% More Money Than Expected; Hailed As Biggest IPO In 20 years!

On Monday, IRCTC IPO opened for subscription and got closed on Thursday 3 October. According to reports, the retail investor segment has shown huge demand as it was subscribed 111.78 times by 4:45 on Thursday.

That means the company got bids worth ?72,200 crore, while they planned to raise ?645 crore.

Through this IPO, the government is offering 2 crore equity shares or 12.6% stake. So after this issuance, the government stake will reduce to 87.4%.

Why So Much In Demand?

The reason for the huge demand is said to be the reasonable valuation at which these shares are being offered.

Seeing the attractive valuation and its monopoly in providing packaged drinking water, catering, online ticket booking services to passengers traveling by Indian Railways, many advisors have recommended this IPO. 

This share was offered at Rs 315-320 by IRCTC but a Rs 10 discount was availed by retail investors. So the effective prices will be Rs ?305-310 per share for retail customers.

The registrar to this IPO is Alankit Assignments Limited. IRCTC is also set up as a private train operator since it has recently started operating India’s first private train Tejas Express.

IRCTC reported a net profit of ?272.6 crore on revenues of ?1,867 crore for the fiscal year 2019.

What Is The Lot Size?

The lot size for this IPO is 40. So one lot will close ?12,200-12,400 for retail investors at the price band of Rs 305-310 per share.

A lot size is a measure or quantity increment suitable to or précised by the party which is offering to buy or sell it.

What Is Allotment Date And Listing date For This IPO? 

Listing on BSE and NSE: 14th October (tentative)

Allotment date: 9 October (tentative).

Who Advised It?

According to Reliance Securities, IRCTC’s revenue and PAT clocked 10% and 9% CAGR respectively for FY17-19.  the Also average EBITDA and net margin stood at 20% and 15%, respectively. 

The advisors said “It has a healthy balance sheet with ?1,100 crore cash to support capex. IRCTC has good dividend pay-out track record, as it made 50% average payout in the last 3 years,”.

The advisors added “The Railways has restored convenience for e-ticket from September 19, which was discontinued for some time. With an average monthly 25 million ticket booking, this is likely to generate additional annual revenue of Rs 450 crore for IRCTC,”.

According to analyst, A change in the policy of the Ministry of Railways could impact the financials of IRCTC while competition could pose a risk to its monopoly position.

Why It Performed So Well?

Many advisors like SAMCO Securities, ICICI Securities, Angel Broking, Canara Securities and Prabhudas Lilladher have recommended a subscribe to IRCTC IPO going by its attractive valuation and its monopolistic nature of the business and asset-light model.

An expert on the primary markets said that “The high brand recall is a big reason the IPO evinced such high interest,”. (reference mint)

Also, the improvement in investor sentiment after the corporate tax cuts also helped in the success of this IPO. But the success of this IPO does not mean that its issuances will go well too.

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