The initial public offer (IPO) of Indian Railway Catering And Tourism Corporation (IRCTC) was subscribed 50 per cent within the first few hours of opening of bidding on Monday.

IRCTC IPO going strong with sturdy demands today, the issue was 0.45 times subscribed. Many analysts and longterm investors have recommended subscribing the IPO of IRCTC, citing valuation comfort. The issue closes for subscription on 3rd October. However, Equity markets will be closed on Wednesday, Oct 2 on account of “Mahatma Gandhi Jayanti”.

IRCTC’s public offer to raise about Rs 645 crore received bids for more than 67 lakh shares against the total issue size of over 2 crore shares, as per exchanges’ data till 1300 hrs. The price range for the company’s IPO has been fixed at Rs 315-320 per share. The issue comprises an offer for sale of 2.01 crore shares of the face value of Rs 10 each. Out of the total issue size, 1,60,000 equity shares are reserved for eligible employees.

IRCTC is the only entity authorised by Indian Railways to provide catering services to railways, online railway ticketing service and packaged drinking water at railway stations and trains in India.

Alankit Assignments Limited is the registrar to the IRCTC IPO.

IRCTC IPO Price Band

Price band per share is ₹315-320. Retail investors and eligible employees get a discount of ₹10 per share. So the effective price band of IRCTC IPO for retail and eligible employees is ₹305-310 per share.

IRCTC IPO allotment date and listing date

The tentative date of allotment of IRCTC shares is 9th October.

IRCTC shares will get listed on both BSE and NSE and tentative date of is 14th October.

Lot size of IRCTC IPO

The lot size or minimum order quantity is 40. So at the effective price band of ₹305-310 per share for retail investors, they have to shell out ₹12,200-12,400 per one lot.

IRCTC IPO: retail portion

3 per cent of the IRCTC IPO has been allocated for the retail portion. Retail investors are allowed to bid up to ₹2 lakh shares. The maximum number of shares retail investors can bid is 640 or 16 lots at lower price band ( ₹1,95,200) as well as 640 or 16 lots at upper price band ( ₹1,95,200-1,98,400).

Other Details About IRCTC

The company operates in four business segments: internet ticketing (12.4 per cent of topline), catering (52.9 per cent), sale of products including packaged drinking water under the “Rail Neer” brand (11.1%), and travel and tourism (23 per cent).

IRCTC is also venturing as a private train operator as the Railways opens key routes to private operators. IRCTC reported a net profit of ₹272.6 crore in FY19, up from ₹220.6 crore in FY18. The company’s revenue grew to ₹1,867 crore in FY19 from ₹1,470 crore in FY18. IRCTC has restored service charges on online train ticket booking from September 2019. The charges are ₹15 per ticket for non-AC and ₹30 for AC classes.

Risk factors

Analysts say a change in the policy of Ministry of Railways could impact the financials of IRCTC while competition could pose a risk to its monopoly position.

YES Securities (India), SBI Capital Markets and IDBI Capital Markets & Securities are the managers to the offer

(With input from agencies)