Railtel IPO: All you need to know

13 Feb 2021  Read 1280 Views

Live life without regrets. But missing this opportunity might top the "list of regrets" which you might accumulate from your investing career. Confused? We're talking about that one thing that has taken the grey market by storm. It's the Railtel IPO, which saw about a 50% increase in terms of the premium in the grey market.

Last few months were witness to a chain of some big IPOs. But for those who missed out on those golden opportunities, this might be your chance to secure an ideal investment option. But before you chose your course, why not acknowledge yourself with some key details. 

So in this blog, we will entangle every detail of the IPO and find answers to the queries which you might have.

Railtel IPO Details

Railtel, which came into existence in 2000, has been working efficiently holding a good name in the market. It operates under the honourable President of India who acts as its promoter, assisted by the Ministry of railways. Having more than 3 lakh+ retail customers, it offers a variety of services such as Data hosting, telecom network, etc. 

The Railtel IPO will open for subscription for the retail investors from Feb 16, 2021, onwards. The subscriptions will close on Feb 18, 2021. So if you have already made up your mind just make sure you fill the subscription form in advance to avoid any last-minute hassle.

The IPO will be a book building issue and will hold a face value of Rs. 10 per equity share. The shares will be sold at a price of Rs 93 to Rs 94 per equity share, in a lot of 155 shares. Any subscription below that is not available. However, the higher limit is fixed at 13 lots containing 2015 shares.

Moreover, the organization is holding about 5 lakh worth of shares for its employees' subscription.

The following table offers details regarding the minimum and maximum subscription:

Particulars 

Lots 

Total shares

Total amount 

The minimum amount for subscription

1 lot 

155 

Rs. 14,570

The maximum amount for subscription 

13 lot

2015

Rs, 1,89,410

It will be an offer for sale with the shares going on both exchanges, that is, the NSE and the BSE. Railtel, which holds a key position in the market as one of the largest telecom infra providers, is coming in for an Initial Public Offering (IPO) following the government's disinvestment plan. The organization will also be getting the benefits of listing at the same time.  

Further, the unit which is owned by the Government of India (GOI) will see a 100 per cent disinvestment via the offer for sale.

About 87,153,369 equity shares will be put up for sale with the entire amount summing up to Rs. 819.24 crores. Listing of the stocks is expected to happen on Feb 26, 2021. 

Key details of the Railtel IPO

Issue opening date

Feb 16, 2021

Issue closing date

Feb 18, 2021

Face value 

Rs.10

Type of issue 

Book building issue

Price of the issue

Rs. 93 – 94 

Issue worth 

Rs 812 crores ( 87,153,369 equity shares)

ICICI Securities, IDBI Capital markets and securities and SBI markets will act as the book running lead managers for the issue.

Should you Invest in Railtel IPO?

Before we answer the most crucial question, let's run through a quick analysis. 

Railtel is an enterprise which deals with information and communication technology (ICT). To offer better services, the company has its data centres in Gurugram, Telangana, Haryana and Secunderabad.

Railtel plays an important role in serving the Indian railways. It offers a number of diversified services to the sector which includes TPaas, e-office services, hardware and system integration, etc. With a good team in place, the company has been showing good prospects since its incorporation.

Financial of Railtel (in INR Crore)

 

2020

2019

2018

2017

2016

Total assets 

2398.10

2227.68

2322.88

2311

2209

Total income

1112

1017

1025

899

641

Total expenses

751

690

712

595

367

PAT 

138

110

156

127

102

The company's financials also show good trends offering hope to investors. Absence of long-term debts and good revenue happen to come up as favourable signals as far as the investors are concerned. Also, the company claims to have a large number of projects in its pipelines.

However, its high dependence on the railways' sector can be a drawback at times. A sector which constantly keeps on evolving with many players competing to get the lion's share, Railtel has to constantly be at the top of its game in order to keep up with the changing scenario. Also, though the stock is seeing a bullish trend in terms of the grey market, experts claim that the not-so-strong business models may be a concern.

Also, the organization has some strong costs involved as it indulges in a lot of fixed expenditure. So any sudden downfall may not be good for the company. 

                            

To sum up

Every IPO comes with fruits that are both sweet and sour. Despite the drawbacks, the future looks good for the PSU and hence, will be a good pick provided you are ready to take the risk associated with a pinch of salt. 

Further, IPO's listing gains can be enough to meet the expected returns. 

The choice ultimately boils down to you. So what's your call?

About the Author: Varishika Dinesh | 86 Post(s)

Varishika is on the verge of successfully completing B.Com. Nothing excites her more than reading books and watching movies. Business, finance, economy? You have her attention.

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