The initial public offering of state-run IRCTC got a huge response on the third and final day, with the issue getting subscribed almost 112 times.
According to data from the stock exchanges, compared with the issue size of 2,01,60,000 shares, the total number of bids received as of 6.15 pm on Thursday were for 2,25,49,94,440 shares.
IRCTC had set a price band of Rs 315-320 a share for the public issue. The government is looking to divest 12.60 per cent stake in the company, via the IPO, which closed for subscription on Thursday.
The strong response to the issue comes even as the the broader equity markets have been volatile over the last few months, which has affected primary market appetite, too. Between January-September 2019, there were 13 IPOs, cumulatively raising Rs 10,709 crore. In 2018, there were 24 public issues raising a total of Rs 30,959 crore.
The key attraction for investors towards the company is that it is the only firm authorised to provide catering services to the Indian railways, online railway ticketing and packaged drinking water in trains and at railway stations.
In recent times, the company has also diversified into catering to non-railway entities, executive lounges and budget hotels, analysts note. It will also now be operating select trains, which will add to its revenues.
Catering accounts for around 55 per cent of IRCTC’s total revenue, while travel and tourism, internet ticketing accounted for around 24 per cent and 12 per cent of revenue respectively.
“IRCTC has unique business model and the company does not have any competition across any business segment. Based on various parameters like strong earnings profile, diversified business segment, healthy return ratio, debt free status and most importantly monopoly business, we have a positive view on the issue,” said Hardik Shah of broking firm Anand Rathi.
Other analysts, too, were extremely bullish on IRCTC.
“It has strong fundamentals and debt free balance sheet along with decent return ratios; ROE (return on equity) being 26 per cent, operating margins of 20 per cent and PAT (profit after tax) margin of 15 per cent augurs well,” said Dharmesh Kant, head of retail research at IndiaNivesh Securities, adding the issue had been conservatively priced.
Kant sees IRCTC’s revenue and profit after tax growing at a compounded rate of more than 20 per cent over the next couple of years.