IRCTC makes a stellar Monday debut, up 101%

New Delhi: A week after it earned the title of the most subscribed PSU IPO ever, state-run Indian Railways Catering and Tourism Corporation (IRCTC) made a strong debut on the stock market on Monday. It got listed at Rs 644 on BSE, a 101.25 premium over issue price of Rs 320. At 12 pm, the scrip was trading 126.14 percent higher at Rs 723.65 on the exchange.

The week that was for IRCTC IPO

The strong start for IRCTC was a given as the stock was quoting at a premium of Rs 220-227 per share in the grey market last week, thanks to 112 times subscription the IPO received during the offer period September 30-October 4. The category for qualified institutional buyers (QIBs) was subscribed 108.79 times, non-institutional investors (NIIs) quota 354.52 times and retail investors 14.65 times. At the issue price, the stock quoted at 19 times FY19 EPS of Rs 17.

IRCTC revenues to shoot up in the next few years

Anand Rathi Financial Services said that the state-run company's revenues should shoot up in the next 1-2 years due to the levying of convenience fee and privatisation of two routes. IRCTC is also expected to reap benefits from the recent effective tax-regime change to 25 percent, the financial services company 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 percent minority shareholders interest," it said.

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The backdrop

IRCTC is a PSU under the Ministry of Railways and is responsible for providing catering services to Railways, online railway ticketing platform and packaged drinking water at railway stations and trains in India. It was conferred with Miniratna status in May 2008. IRCTC has also diversified into other businesses, like non-railway catering and services such as e-catering, executive lounges and budget hotels. The company recorded a 25 percent growth year-on-year in sales to Rs 1,899 crores, and saw its profit growing by 23.5 percent to Rs 272.5 crore in financial year 2019, according to its draft red herring prospectus filed with the regulators in August.

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