RaiTel shares soar 28% on debut to end a tad over Rs 120 in a tepid market

Shares of RailTel Corporation of India (RailTel) rose 28 per cent during their trading debut on Friday despite a sharp selloff in the market. The stock ended at Rs 120.6, up Rs 26.6, or 28.3 per cent, over its issue price of Rs 94. The stock touched a high of Rs 128 and a low of Rs 101 on the NSE, where over Rs 1,500 crore worth of shares changed hands.

At the closing price, the state-owned telecom infrastructure provider will have market capitalisation of Rs 3,896 crore.

Railtel’s IPO had garnered 42 times subscription and attracted over nearly 2.4 million retail applications.

Puneet Chawla, Chairman and Managing Director, RailTel said, “We are overwhelmed with the response from the market. We would make all out efforts to keep the investor confidence high.”

The IPO was handled by ICICI Securities, IDBI Capital and SBI Capital.

The issue comprised of secondary share sale by the government. Following the IPO, the government’s stake will decline from 100 per cent to 72.8 per cent. Through the IPO, the government raised about Rs 820 crore.

“The company has a strong financial position (debt free) and has been consistently paying dividends since 2008. There are no listed peers for the company. The IPO is valued at 21.4 times price-to-earnings on a FY20 trailing basis, which is quite reasonable by looking at the strong future growth rates of the company. We expect a good listing,” Angel Broking had said in an IPO note.

This was the second PSU IPO this calendar year after Indian Railway Finance Corporation (IRFC).