The IPO of IRCTC, the online ticketing, tourism and the catering arm of Railways, will open for subscription on September 30 and close on October 3. IRCTC is looking to raise up to ₹645 crore through this initial public offering (IPO). The issue comprises an offer for sale of 2.01 crore shares of the face value of ₹10 and the price band of the IRCTC IPO has been fixed at ₹315 to ₹320 per equity share. Analysts hope that the recent rebound in stock markets will spur more companies to hit the capital markets. So far this year, only 11 companies have hit the capital markets so far in 2019 garnering over ₹10,000 crore through initial share sales, much lower than 24 firms raising ₹30,959 crore in 2018.
Here are 10 things to know about IRCTC IPO:
1) IRCTC is wholly owned by the government and comes under the administrative control of Indian Railways. IRCTC will not receive any proceeds from the offer and all proceeds will go to the government. The government is offloading 12.5% stake through this offer for sale, which will reduce its stake to 87.5%.
2) The IRCTC IPO is the fourth public offering from a Railway company after RITES, Rail Vikas Nigam and Ircon.
3) IDBI Capital Markets, SBI Capital Markets and YES Securities are book running lead managers to the IRCTC IPO. Alankit Assignments Limited is the registrar to the IRCTC IPO.
4) The lot size if IRCTC IPO is 40. Or, in other words, bids can be made for a minimum of 40 equity shares and in multiples thereof. And not less than 7,000,000 equity shares are reserved for the retail segment.
5) IRCTC is offering ₹10 discount per share on the offer price for the retail category and to eligible employees. Out of the total issue size of 2.01 crore shares, up to 1,60,000 equity shares are reserved for eligible employees.
6) Currently, IRCTC is the sole provider of online railway ticketing, catering and packaged drinking water services.
7) Experts said that high government involvement in the IRCTC’s business could pose as one of the risks in the upcoming IPO since the company’s business and revenue is dependent on railway ministry’s policies.
8) Delhi-Lucknow Tejas Express, which will operational from October 5, will be the first train that will be fully run by the railways’ subsidiary, IRCTC and is Railway’s first step towards privatising operations of some trains.
9) IRCTC could face competition in future in this space. Press Trust of India reported that Railway Board has said that private operators would be identified through a participative bid process to run private passenger day/overnight trains that would connect important cities.
10) IRCTC’s total revenues sales rose 25% to ₹1,957 crore in FY19 while profit rose , profit grew 23.5% to ₹272 crore over the previous year.