Govt files IPO document for IRCTC with Sebi, plans to offload 12% stake

The Indian Railway Catering and Tourism Corporation (IRCTC), the railways' tourism and catering arm, could get listed as early as this financial year. The centre on Thursday filed IRCTC's draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (Sebi).

Market sources say the government plans to offload around 12 per cent stake through the IPO. The share sale could fetch between Rs 500 crore and Rs 600 crore and help the government with its disinvestment target.

IDBI Capital, SBI Capital Markets and Yes Securities will handle the share sale.

According to the DRHP filed by it, IRCTC is the only entity authorised by the Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India. The Central Public Sector Enterprise has also diversified into other business segments like e-catering, executive lounges and budget hotels.

IRCTC operates one of the most transacted websites, www.irctc.co.in, in the Asia-Pacific (APAC) region with transaction volume averaging at 25 million per month and 7.2 million logins a day. Over 1.4 million passengers travel on a daily basis of which 71.42 per cent book their tickets online. Between FY14-19 online bookings have grown at an annual rate of 12.5 per cent.

At a premium of only 49 paise, IRCTC offers an optional travel insurance between Rs 0.75 million – Rs 1 million to its passengers. As of June 30, 2019, over 900 million passengers have opted for this travel insurance.

Though the listing of IRCTC was planned earlier, it was postponed due to the waiver of service charge on e-ticketing by the government, after demonetisation, that wiped out Rs 500 crore in annual revenue for IRCTC. Later, the finance ministry had partially reimbursed this.

The company, however, improved its finances later through utilising the website for advertising, data monetisation, e-auctioning and retail management. It also saw an increase in revenue from its catering business and sale of Rail Neer (the bottled water brand of IRCTC) in last two years.

IRCTC's proposed IPO will follow that of railway PSU Rail Vikas Nigam (RVNL). The centre had raised Rs 480 crore by selling 12 per cent in RVNL in April. In September 2018, the government had launched the IPO of another railway PSU IRCON International, through which the centre had raised Rs 470 crore by selling 10.5 per cent.

Shares of RVNL currently are trading 20 per cent above their issue price, while Ircon shares are 25 per cent below their IPO price.