Highlights:
- IPO of RailTel Corporation of India will open tomorrow
- RailTel IPO will close on the 18th of February
- The government will sell 87.15 million shares via this IPO
The Initial Public Offering (IPO) of RailTel Corporation of India will be open for subscription tomorrow (16th February 2021) and the state-run company has fixed a price band of ₹ 93 – ₹ 94 a share for its initial share-sale. RailTel IPO will close on February 18. RailTel, which provides broadband telecom and multimedia network across the country, is one of the biggest neutral telecom infrastructure providers in the country owning a pan-India optic fiber network on exclusive Right of Way (ROW) along Railway track.
Let us take a look at 10 things which you must know about RailTel IPO:
1) The lot size in RailTel IPO is 155 and at the upper price band of ₹94, the application money will be ₹14,570
2) According to brokerages, the share allocation in RailTel IPO is likely to be finalised on February 23 and listing may happen on the 26th of February
3) ICICI Securities, IDBI Capital, SBI Capital Markets are merchant bankers to the issue
4) The IPO is entirely an offer-for-sale. Thus the company will not receive any fund from the IPO
5) The government will sell 87.15 million (8.71 crore) shares, or a 27.16% stake in this issue. The government plans to raise a little ₹ 819 crore
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6) Half of the issue is reserved for qualified institutional buyers, 35% for retail investors, 15% for non-institutional bidders
7) KFin Technologies Private Limited will be the registrar of RailTel IPO and will manage share allocation and refund
8) For the year ended in March 2020, the company had reported a net profit of ₹ 141 crore as compared to ₹ 135 crore in the previous fiscal.
9) The risk includes unfavourable government policies and regulations, lower spending from governments and competition from private operators.
10) In a note, Choice Broking said, “RailTel has reported a stable financial performance over FY18-20. It reported a 7.5% CAGR rise in top-line to ₹1,128 crore in FY20. Business from telecom services, which contributed around 67.7% to the top-line increased by 4.3% CAGR, while business from projects (contributing average 30.9%) increased by 13.8% CAGR during FY18-20”. The brokerage has a subscribe rating on the issue.
”RailTel is profitable since FY07 and paid dividend since FY08. Average dividend payout stood at around 40% over FY18-20. Networth is positive and consistently growing since incorporation. The company is net debt free and is funding its operations with internal accruals since FY13.
“There are no listed peers, having similar operating model. At the higher price band of Rs. 94 per share, the company’s share is valued at a FY20 P/E multiple of 15.8x (to its restated EPS of Rs. 5.9),” it said.
