RITES IPO: Valuation reasonable, growth prospects look good

The initial public offering (IPO) of RITES, a government-owned mini-ratna, primarily providing consultancy and construction services for transportation projects, is an opportunity for long-term investors wanting to cash on India’s infrastructure growth.
 
The IPO entails disinvestment of 12.6 per cent stake by the government. Given the growth prospects, order book, healthy financials and reasonable valuation, investors could subscribe.
 
RITES initially provided consultancy services to the railways. It has diversified to other transportation sectors such as metro rail projects, roads, airports, etc, enhancing its growth outlook. Consultancy services are still over 60 per cent of revenues but with RITES