IPO Alert: Railtel IPO open from 16-18 February 2021

Key highlights

Price band: ₹93-94 per equity share
Lot size: 155 shares
IPO size: ₹819 crore
Cost per lot: ₹14570
Issue opens: 16 February 2021
Issue closes: 18 February 2021
Basis of allotment date: 23 February 2021
Initiation of refunds: 24 February 2021
Credit of shares to Demat account: 24 February 2021
Expected listing date: 26 February 2021
Registrar: KFin Technologies

About the company

After the Indian Railway Finance Corporation, we have another railway-related company that is about to get listed. Railtel Corporation of India is wholly owned by the government. Its initial public offering is another tick-mark in the government’s ambitious divestment plan of ₹2.1 lakh crore in the current fiscal. Here are the details of the company and its public issue. 

Incorporated on September 26, 2000, Railtel is an information and communications technology (“ICT”) infrastructure provider that falls under the administrative control of the Ministry of Railways. The company was set up to modernise telecom systems for the railways by creating an optic fiber-based broadband network along railway tracks. As of June 30, 2020, the company’s optic fiber network covers over 55,000 route kilometres and covers 5,677 railway stations across India. 

Its business falls under four categories: 

• Telecom Network Services (51.5% of revenue from operations in FY20)
• Telecom Infrastructure Services (11.9% of revenue from operations in FY20)
• Managed Data Center and Hosting Services (₹28.3crore; ~0.02% in FY20)
• Collaboration Services(33.4% of revenue from operations)

In FY20, the company generated about 25% of its revenues, or ₹283 crore, from projects with the Indian Railways.

The company claims to be net-worth-positive since inception. It is valued at ₹1,369.3 crore in FY20. Its operations are funded entirely by internal accruals since 2013 and the company is debt-free.

Its financials have steadily risen too. Revenues from operations have grown at a CAGR of 7.4% during FY18-20, with the company clocking ₹1,128 crore in the last fiscal. In FY20, RailTel reported a net profit margin of 13%. For reference, margins for Reliance Jio Infocomm Limited and Tata Communications Limited stood at 10% and 4%, respectively. 

About the issue

The issue is an offer for sale, wherein all proceeds from the IPO will go to the selling shareholder, namely the Government of India. Considering the upper end of the issue’s price band (₹93-94 per equity share), the issue is priced at ₹819 crore. Meanwhile, the cost per lot of 155 shares comes to ₹14570. 

IPO allocation quota

To know more about the IPO, read its red herring prospectus here. The issue opens on 16 February and you can subscribe to the Railtel IPO with Upstox here. Meanwhile, we’ll keep you posted on all the updates about this IPO and the public issues that follow, so stay tuned!