IRCTC IPO: Hot-Ticket Railways Public Offering Oversubscribed 111 Times

SUMMARY

The shares were oversubscribed 111.85 times

On the opening day of the bidding process, 81% of the shares had been subscribed

The investors bid for over 225 Cr shares of the company

Indian Railway Catering and Tourism Corporation Ltd (IRCTC) has made a sparkling debut on the public markets in three days of its initial public offering (IPO).

The shares have been oversubscribed 111.85 times. While portions allocated for qualified institutional buyers were oversubscribed 108.79 times, retail investors 14.65 times and employees 5.79 times, the IPO was most in-demand among non-institutional investors who oversubscribed it 354.52 times.

On the opening day of the bidding process (September 30), 81% of the shares had been subscribed. The IPO, whose price band had been fixed at INR 315-320 per share, closed on October 3. The issue comprised an offer for sale of 2,01,60,000 shares and is part of the government’s divestment process in public sector undertakings.

As per the data on NSE, investors bid for over 225 Cr shares of the company and bid INR 72K Cr at the upper price band. The government will hold a 87.4% stake in IRCTC after the IPO.

IRCTC manages ticket selling and catering services for the national railway service. The company was incorporated on September 27, 1999, as a public limited company. It is the only entity authorised by the Indian Railways to provide catering services on board trains, sell railway tickets online as well as 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 use Indian railways every day, with over 71.42% of the tickets booked online. From FY2014-2019, online bookings grew at an annual rate of 12.5%, making IRCTC one of the few public sector companies that achieved steady growth, among losses in other units.

This listing is a part of the finance ministry’s decision of strategic disinvestment of public sector undertakings (PSU) to reach the target of $1.5 Tn (INR 1.05 K Cr) as income from disinvestment in FY 2019-20. It has managed to generate close to INR 12 K Cr through strategic disinvestment drive. The ministry also believed that the potential of these entities can be discovered better by strategic investors.