IRCTC IPO opens today, price band fixed at Rs 315-320 a share; all you need to know about the new offer

The state-run Indian Railway Catering and Tourism Corporation (IRCTC), a subsidiary of the Indian Railways, will hit the market today with its initial public offering (IPO). It is likely to be the largest of the IPOs issued by the IR subsidiaries, at Rs 635-645 crore.

An IPO is a financial instrument through which an unlisted company offers shares to the public. The funds raised are used for various purposes, like working capital, debt repayment and acquisitions.

Here are the details of the IPO:

• Indian Railways' subsidiary IRCTC has reportedly fixed the price band for its initial share sale offer between Rs 315 and 320 per share, said a media report
• The issue comprises an offer for sale of 2,01,60,000 shares of Rs 10 face value. Of this, 1,60,000 shares are reserved for employees
• The minimum bid lot is 40 equity shares and in multiples of 40 equity shares thereafter
• The IPO proceeds will go directly to the government
• The total share dilution amounts to 12.60 percent of IRCTC's paid-up equity share capital
• The government is planning to raise up to Rs 645 crore at the price band through the IPO, which will close on 3 October
• Last month, IRCTC had filed draft papers with markets regulator Securities and Exchange Board of India (SEBI) for its IPO
• IDBI Capital Markets & Securities, SBI Capital Markets and YES Securities (India) are the managers to the offer.

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IRCTC operates one of the most transacted websites (www.irctc.co.in), in the Asia-Pacific region with transaction volume averaging 2.5 to 2.8 crore transactions per month during the 5 months ended 31 August.

Indian Railways. Representative image. AFP

IRCTC, a profit-making entity of Indian Railways, reported Rs 272.6 crore net profit in FY19 and Rs 220.62 crore in FY18. The company''s revenue grew to Rs 1,867.88 crore in FY19 from Rs 1,470.46 crore in FY18.

IRCTC 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, according to the draft red herring prospectus (DRHP), .

IRCTC generated Rs 1,957 crore revenue during FY19, a rise of 25 percent from the previous fiscal, the firm’s DRHP stated. The PSU’s net profit jumped 23.5 percent on-year to Rs 272.60 crore during fiscal 2019.

Currently, IRCTC operates in 4 business segments, namely, Internet Ticketing, Catering, Packaged Drinking Water under the “Rail Neer” brand, and Travel and Tourism.

Earlier this year, IRCTC has launched its own payment aggregator system, IRCTC iPay to provide online digital payment option to passengers availing online travel-related services through the IRCTC website.

IRCTC has also diversified into other businesses, including non-railway catering and services such as e-catering, executive lounges and budget hotels.

The internet ticketing currently is 12-13 percent of the revenue and has a margin of about 60-65 percent, Mahendra Pratap Mall, chairman and managing director of IRCTC, told CNBC-TV18.

The CPSE has also diversified into other business segments like e-catering, executive lounges and budget hotels.

Three other Indian Railways subsidiaries to have come out with IPOs are: Rail Vikas Nigam Limited (RVNL), RITES (Rail India Technical and Economic Service) and IRCON (Indian Railway Construction Company Limited) , reported IANS.

The size of RVNL's public offering was Rs 477.11 crore, IRCON Rs 466.93 crore and RITES Rs 460.44 crore.

— With inputs from agencies