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IRCTC IPO subscribed 111 times so far on Day 3

NEW DELHI: The initial public offer (IPO) by state-run IRCTC was headed for a strong conclusion on Thursday, as the issued witnessed 111 times subscription by 4:15 pm. The IPO will conclude later in the day.

The issue had received bids for 2,25,09,16,400 shares against the issue size of 2,01,60,000 shares.

The issue had received 3.25 times bids on Day 2.

IRCTC has set IPO has a price band of Rs 315-320 per share. At the upper price band, the stock is available at P/E multiple of 18.8 times to its FY19 EPS of Rs 17.

Anand Rathi Financial Services said that the company revenues should shoot up in the next 1-2 years due to the convenience fee and privatisation of two routes. Also, the company would get additional benefit from the recent effective tax-regime change to 25 per cent, it said.

"Undoubtedly, the debt free, IRCTC has a strong moat in a monopolistic business. However, the government’s interest would not always align with the 12.6 per cent minority shareholders interest," it said.

The IPO looks attractive due to limited competitive risks, and expected margin swing from revenue windfall with re-introduction of service charge, said Prabhudas Lilladher.

The issue is an offer for sale and is a part of the government's divestment process.

IRCTC operates a website,, with transaction volume averaging 15 to 18 million transactions per month in the three months ended June 30. At present, it operates in four business segments, namely, internet ticketing, catering, packaged drinking water under the “Rail Neer” brand, and travel and tourism.

The inclusion of a convenience fee on railway tickets, setting up 10 water plants in the next two years and the recent tax reduction of corporate tax bodes well for EPS growth, said ICICIdirect in a note.

"Coupled with healthy dividend payout (45 per cent in FY19) and RoE (26.1 per cent), we recommend subscribe rating to the issue at the offer price. Further, at the IPO price band, the stock is available at a price to earnings multiple of 10 times FY21E EPS, which we believe looks attractive from the perspective of future earnings growth,” the brokerage said.

IRCTC IPO to open on Monday: Key things to know

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Key strengths

27 Sep, 2019
> Fourth-largest public offering from Railways > Operates one of the largest websites with a transaction volume of more than 2.5 crore per month, and with approximately 0.72 crore logins per day. > 72.60 per cent of the total Indian Railways' ticket bookings were done online through the company’s website/mobile application during the five months ended August 31, 2019. > Diversification into other businesses including non-railway catering and services such as e-catering, executive lounges, and budget hotels.

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