IRCTC IPO: Can you afford to miss this?

IRCTC had launched Initial public Offering (IPO) of its shares on September 30, 2019 (Monday), with a view to offload 12.6% of Government of India’s stake in the company. IRCTC IPO will help the government rise up to Rs 645 crore. The entire nation waiting for irctc ipo listing date had subscribed 81% of the bids on Day 1. Apart from providing rail tools and providing fresh food in train to the passengers, Indian Railway Catering and Tourism Corporation (IRCTC), the subsidiary of the Indian Railways entered the share market with a view of operating in global market share.

Here are 7 things investors should know before investing in the IRCTC IPO

1. Lot size & investment required: The IPO can be applied in lot sizes of 40 shares. So the minimum investment required to apply for the IPO is Rs 12,800. Retail investors can apply maximum 15 lots that require an investment of Rs 1.92 lakh.

2. Issue break-up: 35% of the shares or nearly 70,000 shares on offer are reserved for retail investors. Half of the shares under the IPO are reserved for institutional investors while 15% is reserved for non-institutional or HNI customers. 1.60 lakh shares are reserved for employees of the company.

3. Post issue promoter shareholding: After the IPO, Govt. of India shareholding in the company will come down to 87.4% from 100% earlier. After listing, the company is expected to have a market capitalization of over Rs 5,000 crore.

4. IPO timetable: IRCTC shares will be listed on both NSE and BSE.

5. Company profile: IRCTC was incorporated in 1999 as a wholly-owned subsidiary of Indian Railways. The company handles online ticket booking services, tourism and e-catering services of Railways. The IRCTC has a monopoly business as it is the only authorized dealer for catering, ticket booking, and water bottles supply in Indian Railways to the passengers. It also provides packaged drinking water in trains and at railway stations in the country. IRCTC’s official website is one of the most transacted websites in the Asia-Pacific region. As on August 31, 2019, more than 8.4 lakh passengers booked tickets online through the IRCTC website and mobile app on a daily basis. In the three months ended June 30, 2019, nearly 18 million transactions were done per month through the website. The company was conferred with ‘Mini Ratna-1’ status in 2008.

6. Strengths: Being the only authorized entity to provide catering services and drinking water in trains, IRCTC has nil competition in its segment. It also gives assurance about its future revenues. The company has also diversified into other businesses like non-railway catering and services such as e-catering, executive lounges and budget hotels, which are in-line with the company’s objective to build a “one stop solution” for its customers.

7. Financials: IRCTC enjoys healthy financial position; as on March 31, 2019, its net worth was Rs 1,043 crore, up from Rs 955 crore on March 31, 2018 and Rs 787 crore on March 31, 2017. For the financial year FY 2018-19, IRCTC reported a net profit of Rs 273 crore on revenues of Rs 1,868 crore, up from Rs 221 crore net profit on revenues of Rs 1,470 crore in the previous financial year. Like most other PSUs, IRCTC also has a strong dividend payment track record.

Why IRCTC IPO is the best choice for Investment in 2020?
India’s market for initial public offerings (IPO) is expected to gather pace in 2020 after this year relatively small crop saw strong gains in the stock market.The 14 mainboard IPOs this year have raised by an average of more than 50% since listing, data compiled by Bloomberg show. The S&P BSE IPO Index, a gauge of shares in their first two years of trading, has climbed 36% in 2019, compared with a gain of 13% for the benchmark S&P BSE Sensex Index.
“We expect this trend to continue in 2020,” said Satyen Shah, Mumbai-based head of investment banking at Edelweiss Financial Services Ltd NSE -9.52 %. “The year 2019 may look subdued in terms of the number of issues, but most of them were well subscribed and investors made good money.

IRCTC Shares
The shares of Indian Railway Catering and Tourism Corporation (IRCTC) have been rallying heavily since their stock market debut last month. The stock price of IRCTC has grown three times from the offer price during its initial public offering (IPO) registering a return of nearly 200 per cent. IRCTC being the exclusive e-ticketing partner for the Indian Railways received a thumping response from all investor classes in the three-day-long bidding period following which IRCTC IPO got subscribed 112 times. According to the latest data available with the exchanges, IRCTC share price has jumped 195 per cent in a brief period of just 20 trading days. IRCTC shares were listed on the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE) on October 14, 2019. The stock of IRCTC has rocketed as much as 194.73 per cent to Rs 943.15 from the share price level of Rs 320. IRCTC commands a market capitalization of Rs 14,924.80 crore on BSE as on November 11, 2019. IRCTC registered a record turnover on a listing day, October 14, 2019, with more than 4.52 crore equity shares being traded on NSE itself translating into a total traded turnover of Rs 3,136.85 crore.

IRCTC IPO Shares
IRCTC IPO is a main-board initial public offering of 20,160,000 equity shares of face value of ₹10 aggregating up to ₹645.12 Crores.
The issue price of the IPO is ₹315 to ₹320 Per Equity Share. The minimum order quantity is 40 Shares per application and the offer type is Book Built Issue.
The IPO opened on Sep 30, 2019 and closed on Oct 3, 2019.
Alankit Assignments Ltd is the registrar for the IPO. The shares are proposed to be listed on BSE, NSE.