IRCTC IPO: Rs 645cr issue set to hit the market on September 30 at price band of Rs 315-320

Indian Railway Catering and Tourism Corporation (IRCTC), the only entity authorised by Indian Railways to provide ticket booking, tourism and catering, said that it is looking to raise up to Rs 645 crore through an initial public offering (IPO) on September 30.

The stake sale in the company is a part of the government’s full-year divestment programme where the Finance Minister Nirmala Sitharaman had set a disinvestment target of Rs 1.05 lakh crore for FY20, up from ₹80,000 crores it had budgeted in the last fiscal. The divestment plan included a listing of profitable CPSEs, strategic disinvestments, minority stake sales, exchange-traded funds (ETFs) and buybacks of shares.

Highlights:

• The IPO will open on Monday (September 30) and close on October 3, 2019, at the price band of Rs 315-320 per share.
• It is an offer for sale and therefore all proceeds will go to the selling shareholder and the company (IRCTC) will not receive any proceeds from the offer.
• The IPO comprises of an offer for sale of 2 crore shares of Rs 10 face value. These shares will represent 12.50% of total paid-up equity where minimum bid lot is 40 equity shares and in multiples of 40 equity shares thereafter.
• Out of the total shares, about 1,60,000 equity shares are reserved for employees taking the total offer size to 12.6% of total paid-up equity.
• The employees and retail investors will get shares at a discount of Rs 10 per share to final offer price.

The book running lead managers to the IPO are SBI Capital Markets, IDBI Capital Markets & Securities and YES Securities (India).

In financial year (FY) 2019, the company profit after tax (PAT) grew 23.5% (y-o-y) to Rs 272.5 crore, sales rose 25% year-on-year (y-o-y) to Rs 1,899 crore. The draft red herring prospectus where the details of the issue filed with SEBI in August showed.

As the IPO comprises an offer for sale of 2 crore equity shares where 50% of the offer reserved for qualified institutional buyers (QIBs), 15% high net-worth individuals (HNIs), and 35% for retail investors. The Government stake would be brought down to 87.5% following the issue.

IRCTC chairman and managing director Mahendra Pratap Mall said that catering services are the biggest revenue generator with 55% of revenues coming from the segment where. In FY19, the catering segment has generated nearly `40 crore worth of revenues.

Another railway entity Rail Vikas Nigam (RVNL) was listed on April where the government raised about Rs 480 crore via the 12.2% stake sale.