IRCTC Files Draft Papers To Raise INR 500-600 Cr In IPO

The government-owned Indian Railway Catering and Tourism Corp. Ltd (IRCTC) has filed draft papers for its initial public offering (IPO) with the Securities Exchange Board of India (SEBI) on Thursday (August 22).

IRCTC manages ticket selling and catering services for Indian railways. The issue comprises of two crore equity shares of the face value of Rs 10 each, which could fetch government INR 500Cr-INR 600 Cr. The government is selling its stake of about 12.5%. IDBI Capital, SBI Capital Markets and Yes Securities will handle the share sale.

The company was incorporated on September 27, 1999, as a public limited company. The company says that it is the only entity authorised by the Indian railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India. It has also diversified into other business segments like e-catering, executive lounges and budget hotels.

The company claims to have a transaction volume of more than 25 Mn per month and 7.2 Mn logins per day and about 800K tickets booked every day through IRCTC website and Rail Connect.

Over 1.4 Mn passengers travel on a daily basis of which 71.42% book their tickets online. Between FY14-19 online bookings have grown at an annual rate of 12.5%.

The IPO of IRCTC has been on the cards since long but was postponed due to the waiver of service charge on e-ticketing by the government, after demonetisation, that wiped out INR 500 Cr in annual revenue for IRCTC. However, the finance ministry had partially reimbursed this.

Later, the finances improved through utilising the website for advertising, data monetisation, e-auctioning and retail management. It also saw an increase in revenue from its catering business and the sale of Rail Neer (the bottled water brand of IRCTC) in the last two years. In the fiscal year 2019,  its sales rose 25% to INR 1,899 Cr and the profit grew 23.5% to INR 272.5 Cr.

Cabinet Committee on Economic Affairs in 2017 had approved public listing for five companies under the Ministry of Railways namely, IRCON international, RITES, RVNL, IRFC and IRCTC. Two of these, IRCON international and RITES were listed during the last financial year.

The Central Public Sector Enterprises (CPSE) divestment targets for 2019-2020 are set to INR 90K Cr. The divestment proceeds in 2018-2019 crossed INR 85K Cr against Revised Estimate of INR 80K Cr.