Despite being an unpredictable stock market, the IPO (Initial Public Offering) of IRCTC appealed to a huge chunk of investors.
IRCTC’s IPO ended of Thursday and got 112 subscriptions which is a record breaker number amongst all the PSU that went public till date. It’ll be a major task for Alankit Assignments Limited (hereby called AAL) as only 2.02 shares were offered but company received bid for over 220 crore shares. Government wishes to retain 87.4% stake in IRCTC. AAS will take care of allocation and refunding process.
The tentative date of IRCTC’s shares allotment is kept as 10th of October 2019, and tentative listing date is expected to be 14th of October 2019 for both BSE and NSE. Retail segment of IRCTC IPO was subscribed whopping 1 times whereas QIBs (qualified Institutional Buyers) segment was subscribed 108.79 times. We see an issue of oversubscription, it shall be balanced out by the following rules, the total number of shares offered for retail investors (individual investors) is divided by the minimum size of the lot. This will determine the maximum figure of applicants that will obtain allotments. Additionally, if the number of applicants in excess of this, then a lottery is held.
The lot size for IRCTC IPO came out to be 40 and the price band for individual investors at Rs. 305- Rs. 310/share (amount is including discounts for these investors). This colossal demand for IRCTC IPO shares is not only due to the attractive valuation, high dividend that the company has been paying in the past but also ‘arguably’ the monopolistic nature of its business.
IRCTC has been authorised by the Railways Ministry of India to not only sell train tickets online, offer catering service but also manufacture and supply the packaged drinking water both at stations and on trains on pan India level.