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IRCTC makes stellar debut on bourses

India, Oct. 15 — Shares of Indian Railway Catering and Tourism Corp. Ltd (IRCTC) surged nearly 128% on BSE from their issue price on Monday, the biggest stock market debut for any company in nearly two years.

irctc
This is the biggest listing gain for any stock since Astron Paper & Board Mill Ltd made its debut with gains of 139.40% on 29 December 2017. (HT File)

The IPO of state-run IRCTC, the sole provider of catering services and online bookings for Indian Railways, was subscribed 112 times at a price band of Rs 315-320. The Rs 645-crore issue was open for subscription between September 30 and October 4.

The stock opened 101.25% higher above the issue price of Rs 320 atRs644. It jumped 132% to touch a high of Rs 743.80 and a low ofRs 625 during the day, before closing at Rs 728.60, an increase of 127.68%.

This is the biggest listing gain for any stock since Astron Paper & Board Mill Ltd made its debut with gains of 139.40% on 29 December 2017. Earlier in the same year, Salasar Techno Engineering Ltd had jumped 151.94% on the day of listing, and Avenue Supermarts Ltd surged 114.30% on listing.

In the last two fiscal years, it clocked 10.3% annual growth, with revenue rising toRs1,868 crore in FY19. However, its profit margin fell to 13.9% in FY19 from 14.3% in FY17 on higher expenses.

The company has high return ratios, with return on capital employed and return on equity of 25% and dividend payouts of more than 40% of net profit, over the past two years, higher than the regulatory norm of 30%. Healthy cash balances, which are more than the net worth of IRCTC, provide comfort against business uncertainties, said analysts.

Based on FY19 consolidated numbers, the issue is priced at a price to earnings (PE) of 19 times. The company is likely to benefit from monopolistic nature of business, significant growth over FY19-21, an asset-light business model with healthy dividend payouts, and strong parentage,” Motilal Oswal Financial Services Ltd said in a September 28 note.

Source from HT media

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