Stellar Debut By IRCTC

Mumbai: October 14: Finally, there is some good news for the Government of India (GoI) as one of the company owned by it, IRCTC Ltd, made a stellar debut on the bourses as its shares doubled on the debt day, giving its investors many reasons to cheer.  

The IRCTC stock rose as much as 132 per cent to Rs 743, as compared to issue price of Rs 320, before ending at Rs 728, up 127 per cent . The IRCTC IPO, which was opened for subscription between September 30 and October 4, was subscribed a massive 112 times. The retail category was subscribed nearly 15 times while qualified institutional buyers (QIBs) segment got subscribed 109 times and non-institutional investors (NIIs) category 355 times.

"IRCTC listing today proved yet again that a high quality business with a clear runway for growth which leaves a lot on the table for investors is a sure shot success. IRCTC has today managed to replicate the success of Avenue Supermart in the primary market where we saw bidders showing appetite for the stock even after the stock doubling on Day-1 of listing," said S Ranganathan, head of research at LKP Securities.

The issue comprised an offer-for-sale of 2.01 crore shares of face value of Rs10 each. Before IRCTC, Avenue Supermarts Ltd, owned by billionaire Radhakishan Damani, was another stock more than doubled on listing in March 2017 after the company’s IPO got bids for 106 times the quantity offered.

Yes Securities (India), SBI Capital Markets and IDBI Capital Markets were the merchant bankers of the IRCTC issue while Alankit Assignments was the registrar. The shares were allotted on October 10. The government mopped up nearly Rs 650 crore from the sale of shares of IRCTC and its stake is now down to 87.4 per cent.

IRCTC is the fourth railway company to be listed on the bourses after RITES, Rail Vikas Nigam and Ircon.

IRCTC reported a net profit of Rs 272.6 crore in FY19, up from Rs 220.6 crore in FY18. The company's revenue grew to Rs 1,867 crore in FY19 from Rs 1,470 crore in FY18.

IRCTC enjoys a monopoly in its business as it is the only entity authorised by Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India.

However, analysts are of the view that the stellar performance from the IRCTC, a public sector undertaking (PSU) one off the exception and can not be extrapolated as all the future offerings by the central government will perform the same way as part of its aggressive disinvestment programme lined up for rest of the fiscal. IRCTC as a company has been very good performer from its inception and the IPO was attractively priced together. This may not be true for the other offerings from the centre’s stable”, they said.

Company Offer Price (Rs.) Debut Gains (%)

Avenue Supermarts Rs 299 114 per cent 

Central Depository Rs 149 75 per cent

HDFC AMC Rs 1,100 65 per cent

Dixon Technologies Rs 1,766 64 per cent 

AU Small Finance Bank Rs 358 51 per cent