The Indian Railway Catering and Tourism Corporation (IRCTC) shares made a grand debut on bourses on Monday after its initial public offering (IPO) received a thunderous response.
The IRCTC stock touched a high of Rs 698 on BSE, 118% higher than its issue price of Rs 320. At 10:43 am, the IRCTC stock was trading near day’s high at Rs 686 after opening the session at Rs 644.
Though the issue price was set at the upper end of the price band, retail investors and employees were eligible to receive an additional discount of Rs 10 per share. Hence, the final issue price worked out at Rs 310 per share for them.
The Rs 638-crore IRCTC IPO was subscribed 112 times -- the highest ever subscription among share sale offers by public sector units. The qualified institutional buyer category was subscribed 109 times, net institutional investor category 354.5 times, retail category 15 times and employee category 5.82 times.
Most markets experts were expecting listing gains of over 50% for IRCTC shares on the back of high demand seen by the IPO. The grey market also reportedly indicated a premium of more than 65% to the issue price.
In fact, many brokers were seen giving strong one-year outlook for the stock given IRCTC’s monopolistic nature of business. “Considering its monopoly in the industry, high entry barrier business, diversified service offerings, favourable industry dynamics with strong levers in place to drive sustainable, profitable growth, IRCTC a competitive advantage for long-term play. Hence considering strong cash generating business, high ROCE and healthy dividend yield, we are positive with a target of Rs 650-670 in next 12 months,” Prashanth Tapse, AVP Research at Mehta Equities, told Moneycontrol.
Rudra Shares and Stock Brokers also maintained a positive outlook on the IRCTC stock with the one-year price target of Rs 675 as the company enjoys monopoly, has pricing power and future growth potential.
IRCTC is a Mini-Ratna public sector enterprise and a wholly-owned subsidiary of Indian Railways. It operates in four business segments—internet ticketing, catering, packaged drinking water under the Rail Neer brand, and travel and tourism. After the public issue, the government’s shareholding in the company will be reduced to 87.4% from 100%.
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