IRCTC files draft red herring prospectus with Sebi for IPO: Details here

The Indian Railway Catering and Tourism Corporation (IRCTC), the Railways’ tourism and catering arm, could get listed within this financial year. The Centre on Thursday filed IRCTC’s draft red herring prospectus (DRHP) with 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, IRCTC is the only entity authorised by the Indian Railways to provide catering services to railways, online tickets and packaged drinking water at railway stations. 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, in the Asia-Pacific region with transaction volume averaging at 25 million per month and 7.2 million log-ins a day. 

Over 1.4 million passengers travel on a daily basis, of which 71.42 per cent book their tickets online. Between FY14 and FY19, online bookings have grown at an annual rate of 12.5 per cent.

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, which wiped out Rs 500 crore in annual revenue for IRCTC. Later, the finance ministry 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.