RailTel Corporation debuts at 16% premium over issue price of Rs 94

The initial public offer by RailTel was subscribed 42 times

Shares of RailTel Corporation of India (RailTel) listed at Rs 109 on the NSE on Friday, a premium of 16 per cent over its issue price of Rs 94 per share. Meanwhile, on the BSE, the scrip listed at Rs 104.60 per share.

The state-owned telecom infrastructure provider's IPO got bids 42 times more demand than the shares on offer. The offering for 61 million shares got bids for 2.6 billion. The institutional investor portion of the IPO was subscribed 65 times and the high-net-worth individual (HNI) portion was subscribed 73 times. The retail and employee categories were subscribed 17 times and 3.4 times, respectively.

This is the second public setor IPO this calendar year after Indian Railway Finance Corporation (IRFC).

Analysts had advised against booking profit and exiting the stock in case of a listing at a premium as they believe the company is a long-term bet with good business prospects.

"Investors should wait and hold the stock as it is a good story. RailTel has good prospects and it will get business from Indian railways and private players in the future. I am positive on the company and investors can hold shares for the long-term," said Keshav Lahoti, equity research analyst at Angel Broking.

Astha Jain of Hem Securities had recommended booking partial profit in case of listing premium of 12 per cent or above but holding the remaining stock for the long-term on the back of positive industry dynamics and the edge RailTel holds over peers. READ MORE

Meanwhile, some analysts in their IPO coverage reported had flagged risks such as the company's dependence on the government projects and single-digit PAT CAGR of 7.5 per cent and 2.5 per cent, respectively from FY18 to FY20.