RITES hits highest level since listing; stock zooms 20%

The stock rallied 20% to Rs 267, surging 38% in past one week from Rs 194 on the BSE.

Shares of railways consultancy firm RITES has zoomed 20% to Rs 267, its highest level since listing on July 2, 2018. Thus far in the current week, the stock rallied 38% from Rs 194, as compared to 2.3% rise in the S&P BSE Sensex.

RITES, the first state-owned firm to hit the initial public offering (IPO) market in the current fiscal, was trading 44% higher against its issue price of Rs 185 a share. It touched a low of Rs 190 during intra-day deal on July 2.

The Rs 4,660-million IPO had garnered strong investor demand, with the issue getting subscribed more than 67 times. The category set aside for qualified institutional buyers (QIBs) was subscribed 71.72 times, non-institutional investors 194.56 times and retail investors 15.74 times.

RITES is a wholly owned Government Company, a Miniratna (Category – I) Schedule ‘A’ Public Sector Enterprise. It is a leading player in the transport consultancy and engineering sector in India and the only company having diversified services and geographical reach in this field under one roof.

RITES’ order book stood at around Rs 48 billion as of March 2018 (3.5X of FY17 top-line). The company receives orders on nomination/single tender basis on regular intervals from its clients such as national government, governmental instrumentalities and public sector enterprises.

“In terms of valuations, pre-issue PE works out to 12x of annualized FY18 EPS '17 (at the upper end of the issue price band), which is reasonably priced considering 3.5x of order book with execution capability and experienced management, maintaining the RoE level in the range of 17-18%, diversified client base and increasing opportunity of revenue from Railways due to new investment in electrification and infrastructure. Given that the RITES is a preferred consultant of Indian Railways along with other government authorities with exposure in international operation and fair valuation of issue,” Angel Broking had said in IPO note.

At 03:16 pm; RITES was trading 18% higher at Rs 262 on the BSE, as compared to 0.94% rise in the S&P BSE Sensex. The trading volumes on the counter jumped more than 10-fold with a combined 11.86 million equity shares, representing 5.93% of total equity of the company changed hands on the NSE and BSE so far.