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Wednesday, March 03, 2021

RailTel IPO oversubscribed within hours on first day: Here’s everything you need to know

RailTel IPO subscription: The initial public offering (IPO) of RailTel Corporation of India has a price band of Rs 93-94 per share and will be open for subscription during February 16-18, 2021. The issue got oversubscribed within a few hours on the first day itself.

By: Express Web Desk | New Delhi |
Updated: February 16, 2021 5:33:20 pm
Railtel, RailTel Corporation of India(Image source: Railtel India website)

The initial public offering (IPO) RailTel Corporation of India opened for subscription earlier today and oversubscribed within a few hours itself. So far, the issue was subscribed 2.64 times by the end of first day of bidding.

It received a demand for 16,13,74,220 shares across both the stock exchanges against 6,11,95,923 shares on offer, data from National Stock Exchange (NSE) showed.

The RailTel IPO will be available for subscription till Thursday, February 18, 2021, and the price band of the government-owned information and communications technology infrastructure provider has been fixed at Rs 93-94 per share. The public issue is expected to fetch up to Rs 819.2 crore at the upper end of the price band.

Investors looking to subscribe to RailTel IPO can bid in a lot of 155 equity shares and multiples thereof. At the upper price band, they will be shelling out Rs 14,570 to get a single lot of RailTel. The RailTel shares will be listed on both BSE as well as the NSE.

All applicants of RailTel IPO also must note that the cut-off time for UPI mandate confirmation is Friday, February 19, 2021, upto 12:00 pm. If they fail to do so then their application may not be considered.

The RailTel IPO is entirely an offer-for-sale (OFS) through which government will offload over 8.71 crore (8,71,53,369) equity shares, as per the information given in the red herring prospectus.

RailTel is one of the largest neutral telecom infrastructure providers in the country, owning an optical fibre network on the right of way along the railway tracks. It is a Mini Ratna (Category-I) Central Public Sector Enterprise, wholly-owned by the Government of India and under the administrative control of the Ministry of Railways.

Prior to the public offer, the anchor investors’ portion was open for subscription on Monday where RailTel raised Rs 243.99 crore from 14 anchor investors.

ICICI Securities, IDBI Capital Markets & Securities and SBI Capital Markets are the book running lead managers to the RailTel IPO while KFin Technologies is the registrar of the issue.

The object of the OFS is to carry out the disinvestment plan and to achieve the benefits of listing the equity shares on the stock exchanges. The company will not receive any proceeds from the Offer and all proceeds shall go to the selling shareholder.

Geojit Financial Services, IIFL Securities and KRChoksey Shares and Securities in their respective research notes have all recommended “Subscribe” to the offer.

IIFL Securities in its IPO note said, “At Rs 94 per share, the valuation on H1FY21 annualized EPS (w/o adjusting for impairment & non-recurring items) is optically high at 33x but the same post adjustment is 20x. Our modest 6 per cent revenue CAGR over FY20-23E and steady state margin assumption results in FY23E P/E of 17x, which is fair considering additional growth drivers from Indian Railways initiatives. Hence, we recommend SUBSCRIBE from long term perspective.”

KRChoksey Shares and Securities in its research report noted that “Railways have agreed to authorize RailTel to use their right of way for the purpose of establishing and Optical Fiber Cable (OFC) network by laying, amongst others, cables and pipes, and transfer their existing OFC assets to RailTel. The agreement between Ministry of Railways and RailTel also dictates that RailTel will commercially exploit the surplus capacity of the network while the Ministry of Railways will continue to make captive use of the same, thus making RailTel a key network for the Indian Railways. Accordingly, there are significant opportunities for companies, such as, RailTel pursuant to the Indian Railways ambitious plans. Given the Railway plan for modernization of its network, we expect RailTel to benefit from the opportunity going ahead and hence we give a “Subscribe” rating to the issue.”

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