The initial public offering (IPO) of Indian Railway Catering and Tourism Corporation (IRCTC) was fully subscribed in the morning deals on Tuesday, the second day of the bidding process. Till 10:45 am, the issue was subscribed 1.1 times.
The total bids received stood at 22.5 million equity shares while the total issue size stands at 20.2 shares. The retail investors' portion was subscribed a total of 3.23 times while NII (Non Institutional Investors) quota saw a subscription of 0.42 times, data available with BSE and NSE showed.
The issue was subscribed about 81 per cent on the opening day of bidding on Monday. The price range for the IPO has been fixed at Rs 315-320 per share. The issue comprises an offer-for-sale of 20 million shares of face value of Rs 10 each.
Out of the total issue size, 1,60,000 equity shares are reserved for eligible employees. Bidding for the offer of the railways' tourism and catering arm will close on Thursday. The IPO is part of the government's ambitious disinvestment programme that targets raising Rs 1.05 trillion via this route in financial year 2019-20 (FY20).
IRCTC is a Central Public Sector Enterprise (CPSE), wholly-owned by the Government of India (GoI) and under the administrative control of the Ministry of Railways (MoR). It operates one of the most transacted websites, www.irctc.co.in, in the Asia-Pacific region with transaction volume averaging 25 million to 28 million transactions per month.
Most analysts have given a 'Subscribe' rating to the offer given the attractive valuation and its monopoly business in online rail ticket booking and food catering on running trains. "IRCTC has good dividend pay-out track record, as it paid nearly 50 per cent average pay-out in the last 3 years. Assuming moderate revenue growth of 10 per cent CAGR (compund annual growth rate) through FY19-21E, the Company is valued at 13x FY21E earnings, which appears to be justified considering its business model, steady growth and healthy return ratios. Hence, we recommend SUBSCRIBE to the issue," wrote analysts at Reliance Securities.