IRCTC Is Going Public On September 30 As Govt Plans To Reduce Stake

IRCTC Is Going Public On September 30 As Govt Plans To Reduce Stake

SUMMARY

The IPO price band has been fixed at INR 315-320 per share

The IPO will close on October 3

Following the IPO, the government's stake in IRCTC will come down by 12.5%

On Wednesday (September 25), the government-owned Indian Railway Catering and Tourism Corp. Ltd (IRCTC) has announced that it will be launching its initial public offer (IPO). According to reports, IRCTC is looking to raise up to INR 645 Cr as it opens bids on September 30.

The IPO, whose price band has been fixed at INR 315-320 per share, will close on October 3. The issue comprises an offer for sale of 2,01,60,000 shares and is a part of the government’s divestment process.

Here Are The Details Of The Offer

The floor price and cap price are 31.5 times and 32 times the face value of the equity shares respectively. There will also be additional employee reservation portion of 1.6 lakh shares, taking the total offer size to 12.6% of total paid-up equity.

Of the total shares on offer, 50% will be available for allocation to qualified institutional buyers (QIBs), including 2 lakh equity shares for the mutual fund portion on a proportionate basis. In addition, not less than 15% of the offer will be available to non-institutional investor category and at least 35% will be made available to the retail category.

The book running lead managers to the offer are IDBI Capital Markets & Securities, SBI Capital Markets and YES Securities (India). Following the IPO, the government’s stake in IRCTC will come down by 12.5%.

IRCTC: Over 1.4 Mn Daily Passengers

IRCTC manages ticket selling and catering services for Indian railways. 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 Challenges Of IRCTC IPO

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.

However, recently, the government allowed IRCTC to bring back the service charge on online ticket booking and the same was levied from September 1. The service taxes were removed in 2016 to boost digital transaction, after the demonetisation of old INR 500 and INR 1K currency.

The BJP-led government has so far offloaded various government-owned companies to reach INR 1.05 Tn for this financial year. It has managed to generate close to INR 12 K Cr through strategic disinvestment drive.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
Unlock 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
Unlock 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

IRCTC Is Going Public On September 30 As Govt Plans To Reduce Stake-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

IRCTC Is Going Public On September 30 As Govt Plans To Reduce Stake-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

IRCTC Is Going Public On September 30 As Govt Plans To Reduce Stake-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

IRCTC Is Going Public On September 30 As Govt Plans To Reduce Stake-Inc42 Media
IRCTC Is Going Public On September 30 As Govt Plans To Reduce Stake-Inc42 Media
You’re in Good company