IRCTC Debuts In Stock Market With 125% Premium; Hailed As Best IPO In 20 Years!

IRCTC Debuts In Stock Market With 125% Premium
IRCTC Debuts In Stock Market With 125% Premium

The IRCTC IPO performed very well and its debut is a bright spot in India’s IPO history. 

With this IPO, the government has earned around Rs 643 crore from the sale of the 20.1 million shares in a price range of ?315-320 per share. Afterwards, the stake in IRCTC has now reduced to 87.4%.

How Did It Perform On Its First Day?

On Monday, Indian Railways Catering and Tourism Corporation (IRCTC) first time launched in Bombay Stock Exchange and National Stock Exchange.

The exciting part is the shares almost doubled its price on listing in the market.

IRCTC shares reached Rs 644 on the BSE index on Monday. While it reached to Rs 626 on the NSE. The IRCTC issue price was Rs 320.

The IRCTC IPO got huge response and was subscribed 112 times after its opening on 30 September.

In that retail category, It was subscribed almost 15 times and qualified institutional buyers (QIBs) segment was subscribed more than 109 times.

Many market researchers had advised people to subscribe to the IRCTC IPO seeing it potential gain in the future. 

The issue consisted of an offer-for-sale of over two crore shares with a face value of Rs 10 each.

The IRCTC shares are being offered at a premium of Rs 240 per share in the gray market. According to news agency IANS, it will convert into a gain of over 70% from the issue price.

The figures noted in this IPO makes IRCTC the best performing public sector undertaking(PSU) and makes this most successful IPO  in the last two financial years in terms of overall subscriptions.   

The share allotment finished on 10 October. Alankit Assignments was the registrar for this IPO.

While Yes Securities (India), SBI Capital Markets and IDBI Capital Markets were the merchant bankers who handled the issue.

IRCTC is the most successful amongst the four companies from the Indian Railways umbrella which became public.

IRCTC Insight

IRCTC’s main business is spread into four vertices – tourism services, railway catering, online ticketing and packaged drinking water.

It is the only subsidiary of Indian Railways to provide these services in trains.

Out of these, catering services is the biggest contributor to IRCTC’s revenue as the company provides about half of the drinking water sold on stations.

While Internet ticketing adds to its net income as around 3/4th of 1.4 million travellers booked their tickets online during the April-to-August period.

Abhimanyu Sofat, head of research at Mumbai-based IIFL Securities Ltd said “It is a unique IPO as most of IRCTC’s businesses are a monopoly. There are future levers of growth in terms of the fee charged on the ticket booking and packaged drinking water,”. (reference Mint)

The company has started charging a fee on online tickets booking from 1 September.  According to Arafat Saiyed, analyst at Mumbai-based brokerage Reliance Securities Ltd, this will add around 4.5 billion rupees annually to its revenue.

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