IRCTC IPO Opens on Sep 30: Should you Invest?

Indian Railway Catering and Tourism Corporation (IRCTC) has recently filed draft papers with market watchdog SEBI and the IPO opens on Sep 30th 2019.  

IRCTC is the only authorized entity by Indian Railways that can provide railway tickets, catering services, packaged drinking water to the passengers.

It was conferred with the status of Miniratna on May 1, 2008. It operates through its website www.irctc.co.in in the Asia Pacific region. During the month ended June’19, transaction volume averaged 15 million to 18 million per month.

The company has diversified its business and offers non-railway catering services like e-catering, executive lounges and budget hotels. At present, IRCTC operates in four business segments, e-ticket booking, catering, packaged drinking water under the flagship brand “Rail Neer”, travel and tourism. 

IRCTC Financial Performance

Financial Performance of (in Crores) IRCTC

	FY19	FY18	FY17
Total Revenue	1,956.7 Cr	1,569.6 Cr	1,602.9 Cr
Total Expense	1,526.7 Cr	1,223.9 Cr	1,247.8 Cr
Comprehensive Income	272.9 Cr	224.8 Cr	231.1 Cr
Net margin (%)	13.9	14.3	14.4

Earnings Per Share (EPS) = Rs 17.04

PE Ratio = 18.48 – 18.77

Return on Net Worth (RONW) = 26.14%

Net Asset Value = Rs 65.18 per share

IRCTC IPO Details

The issue will comprise of 2 crore equity shares with the face value of Rs 10 each. The IRCTC IPO size is expected to be Rs 500-600 crore.

The book leading managers of the offer are IDBI Capital Market and Securities Limited, SBI Capital Markets Limited, YES Securities India Limited.

The organization was incorporated on September 27, 1999 as a public limited corporation. Not less than 7,00,000 shares are meant for the retail segment. Right now, the company is offering Rs 10 discount per share on its offer price for the retail category to eligible employees.  Of the total issue size of 2.01 crores, upto 1,60,000 shares are reserved for eligible employees.

The government plans to divest a 12.5% stake through this offer and it will reduce its stake in the organization to 87.5%.

IPO Opens on:  30 September 2019

IPO Closes on:  3 October 2019

Price Band:  Rs 315-320 per share

Bid Lot: 40 shares and in multiples of 40 shares

Maximum Price: Rs 12,800

Fresh issue: Rs 0

Offer for Sale: Rs 635.04-645.12 crore

IPO Size: Rs 635.04-645.12 crore

Should you Invest?

The railways are giving itself a huge makeover by launching Tejas Express, introducing private passenger trains, and by offering free Wi-Fi services. Apart from that, the company is taking several steps to boost revenue, so all in all investing in this IPO would be a win-win deal.