RailTel IPO subscribed over 7 times so far on last day
By 10.20 am, the issue had received bids for 44,42,32,325 shares, which was 7.29 times the total issue size of 6,11,95,923 shares.
Till Day 2, the issue was subscribed 6.55 times with the retail quota getting bids for 10.55 times the quota limit. While the qualified institutional buyer quota was subscribed 2.97 times, the non-institutional investor category bade for 2.63 times the quota limit. The employee reservation category was subscribed 1.85 times.
The issue is an offer for sale for 87,153,369 equity shares in the price band of Rs 93-94. At the upper limit of this price band, the IPO is valued at 21.4 times PE on a FY20 trailing basis. Its enterprise value (EV) is four times the earnings before interest, tax, depreciation, and amortisation (Ebitda).
Abhay Doshi, a Gujarat-based dealer of unlisted shares who also tracks the grey market, said the stock was commanding a premium of Rs 12-14 on Thursday, which was far below the Rs 47 premium it was enjoying a few days ago.
“The prospects of the company are very good, but it looks like sentiment has changed due to dull participation of QIB and HNI categories till now,” the founder at UnlistedArena.com said.
Analysts said RailTel is a debt-free company and pays consistent dividends and, thus, could witness some traction. But there are a few red flags for long-term investors. Firstly, the company has delivered single digit revenue and PAT fromFY18 to FY20. There is high dependence on government entities and concentration risk given that 23.8 per cent of its revenues comes from top three customers. It is present in a highly regulated industry which is another cause of concern.
Other railway infrastructure stocks such as Ircon International, RITES and RVNL are trading at an average PE of 9.5 times.
“But considering the futuristic service & growth plans of the Indian Railways and RailTel’s ability to monetise its existing assets through subscription plans and co-sharing with private operators, we feel that fundamentals are positive for the company. Thus we assign a ‘subscribe’ rating for the issue,” said Choice Broking.
RailTel had on Monday raised Rs 243.99 crore from 14 anchor investors. Foreign portfolio investors who participated were UK-based Aurigin Capital via its Aurigin Master Fund and Utilico Emerging Markets Trust, Reliance Capital managed Cohesion MK Best Ideas Sub-Trust, Singapore based, Integrated Core Strategies Asia and Goldman Sachs India.
