RailTel IPO – Issue Dates, Price Band, Review and Analysis – Should you invest?
RailTel IPO (RailTel Corporation of India IPO) – Issue Dates, Price Band, Review and Analysis – Should you invest?
RailTel IPO news is buzzing in the stock market now. Railtel IPO date is fixed now and would open for subscription on 16th February, 2021. RailTel Corporation of India is a public sector unit which is an Information and Communication Technology (ICT) infrastructure provider company in India. The Recent IRFC IPO has disappointed investors and there is a BIG question mark whether one should invest in PSU IPOs or avoid. Should you invest in RailTel IPO? What are the risk factors an investor should keep in mind before applying for this IPO?
About RailTel Corporation of India Limited
RailTel is an information and communications technology infrastructure provider and are one of the largest neutral telecom infrastructure providers in India.
It is Mini Ratna (Category-I) Central Public Sector Enterprise, wholly-owned by the Government of India and under the administrative control of the Ministry of Railways. They were incorporated on September 26, 2000 with the aim of modernizing the existing telecom system for train control, operation and safety and to generate additional revenues by creating nationwide broadband and multimedia network by laying optical fiber cable by using the right of way along railway tracks.
As of June 30, 2020, company optic fiber network covers over 55,000 route kilometers and covers 5,677 railway stations across towns and cities in India. The transport network is built on high capacity dense wavelength division multiplexing technology and an Internet protocol/ multi-protocol label switching network over it to support mission critical communication requirements of Indian Railways and other customers.
They operate data centers in Gurugram (Haryana) and Secunderabad (Telangana) to host and collocate critical applications for customers including the Indian Railways. In addition to strategic and critical network infrastructure services, it also undertake various ICT projects for the Indian Railways, central government and state governments, including various train control system projects for Indian Railways.
RailTel IPO Details
Here are the IPO issue details including RailTel IPO launch date.
|RailTel Corporation of India IPO – Issue Details|
|IPO Opening Date||16-Feb-21|
|IPO Closing Date||18-Feb-21|
|Face Value||Rs 10 per share|
|IPO Price band||Rs 93 to Rs 94 per share|
|Issue Size||Rs 819 Crores|
|IPO Lot Size||155 shares|
|Lead Managers||ICICI Securities
SBI Capital Markets
|Listing at||BSE and NSE|
Download RailTel IPO RHP
Would be updated once it is available
Objects of issue – RailTel IPO
Here are the objects of the IPO issue.
1) To carry out the disinvestment plan by the selling shareholder
2) To achieve the benefits of listing the equity shares on the stock exchanges.
3) The company will not receive any proceeds from this offer.
Who are the company promoters?
President of India (acting through the Ministry of Railways) is the promoter of the company.
Here is the summary of the financial information of the company.
|Total Revenues (Rs in Millions)||Profits after tax
(Rs in Millions)
Its EPS for FY2020 is Rs 4.4 and last 3 years average EPS is Rs 4.3.
What are the key strengths of RailTel Corporation of India?
Every investor should understand the company’s key strengths so that one can compare with its competitors to know how unique is such company in their business. Their investment decision would change based on these facts. Here are the key strengths of the company.
1) Among the largest neutral telecom infrastructure providers in India with pan-India optic fiber network
2) Diversified portfolio of services and solutions
3) Key partner to the Indian Railways in digital transformation
4) Experience in executing projects of national importance with a robust pipeline of projects
5) Strong track record of financial performance
6) Professionally managed with strong corporate governance and senior management team with significant industry experience
What are the various strategies of RailTel Ltd?
Company strategies would help investors to know what company is intending to do in the future and whether these strategies would help in revenue or margin growth. Such information would help investors to decide whether to invest for short term, medium term or for the long term. Here are the company strategies.
1) Continue to expand its telecom services and deploy latest technologies
2) Further diversify services and solutions with a focus on Indian Railways
3) Expand its services outside India
Why to invest in this IPO?
Here are a few reasons to invest.
1) RailTel Corporation of India is a PSU unit which his wholly owned by the Government of India and administrated by the Ministry of Railways. It is an Information and Communication Technology (ICT) infrastructure provider company where there are no listed peers.
2) It has generated stable revenue growth in the last 3 years.
3) It generates consistent margins in the last 3 years. Its margins were at 13.1% in FY2018 Vs 12.1% in FY2020.
Risk Factors of investing in this IPO
These risk factors can impact company revenue and margins which would affect its share price. Investors should go through these points and understand them before investing.
1) The Telecom industry in India is highly regulated and any change in law, regulations and government policies could impact business and future prospects of the company.
2) Company derives a substantial portion of revenue from PSU customers, Indian Railways and other Govt entities which exposes risks inherent in doing business with them. This can affect its business.
3) If the company does not continue to provide telecom or related services that have technologically up to date, they may not remain competitive and its business can affect.
4) Company is involved in certain legal proceedings. Any adverse developments related to which could materially and adversely affect its business.
5) If company cannot scale its business or manage its business effectively or it is unable to successfully implement its strategies, it would adversely affect its business.
6) Internet security concerns and illegal distribution of third-parties could adversely affect its broadband internet access services.
7) The company depends on the continued service of its employees, and its business and growth prospects may be disrupted if they lose it employees’ services or if an employee costs increase.
7) For complete internal and external risk factors, you can refer the RHP of the company.
RailTel IPO Promoter Holding – Pre and Post IPO
Pre-issue share holding – 100%
Post issue share holding – Would be updated
RailTel IPO launch date and Schedule
|RailTel Corporation of India IPO Schedule|
|Finalization of Allotment||23-Feb-21|
|Initiation of Refunds||24-Feb-21|
|Credit to Demat Account||25-Feb-21|
|IPO Shares Listing Date||26-Feb-21|
RailTel IPO price valuations
While RailTel IPO news was there for some time, the IPO date and issue price is announced now. Here is how the valuations look like based on issue price.
1) On the upper price band of Rs 94 and EPS of Rs 4.4 for FY20, the P/E ratio works out to be 21.3x.
2) For last 3 years EPS of Rs 4.3, the PE ratio is 21.8x.
34) Means, the company asking price of Rs 94 of upper price band in the P/E range of 21.3x to 21.8x.
4) There are no listed peers in the same line of business, hence the issue price cannot be ascertained whether it is under priced or overpriced. However, the RailTel issue price at P/E of 22x is attractively priced.
RailTel IPO Grey market premium (GMP) shows 34% higher (trading at Rs 126 per share) as on 11th February, 2021. If you observe, IRFC IPO was trading at just Rs 1-2 GMP and currently it is trading marginally lower than the issue price. This indicates that RailTel IPO can post listing gains.
RailTel IPO – Should you invest?
Investors seeing Railtel IPO date postponing in the last 2-3 months and finally the date is announced now.
RailTel Corporation of India is a PSU ICT company in India (which is wholly owned by Govt of India). It has generated stable revenue growth. It is generating consistent margins in the last 3 years. RailTel IPO expected price / issue price is attractively priced. Recently IRFC IPO (PSU) has listed below the issue price. While there is good potential, investors may or may not be inclined towards such IPOs. Hence, one need to see how RailTel IPO would float in the current market from investors sentiment perspective. High risk investors can invest in this IPO for medium to long term perspective.
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