RailTel IPO subscribed 42 times; firm heads for Rs 3,000 cr valuation

The initial public offering (IPO) of state-owned telecom infrastructure provider RailTel Corporation of India (RailTel) 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. Given the high demand, the government is likely to price the Rs 820-crore IPO at Rs 94, the top-end of the price band. At that price, the company will be valued at around Rs 3,000 crore. In FY20, the company had clocked net profit of Rs 140 crore on revenues of Rs 1,128 crore.

The IPO comprised the government’s secondary share sale. After the IPO, the government’s stake will decline from 100 per cent to 72.8 per cent.

“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 a note.

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