RailTel Corporation of India IPO (RailTel IPO) – Issue Dates, Price Band, Review and Analysis

RailTel IPO – Issue Dates, Price Band, Review and Analysis – Should you invest?

RailTel Corporation of India IPO (RailTel IPO) – Issue Dates, Price Band, Review and AnalysisRailTel 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?

Also Read: Nureca IPO opens on 15th February, 2021 – Should you subscribe?

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
IDBI Capital
SBI Capital Markets
Listing at BSE and NSE

Download RailTel IPO DRHP

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.

Company Financials

Here is the summary of the financial information of the company.

Fin. Year
ending
Total Revenues (Rs in Millions) Profits after tax
(Rs in Millions)
Profit %
Mar-2018 10,212.1 1,340.0 13.1%
Mar-2019 10,382.6 1,353.0 13.0%
Mar-2020 11,660.0 1,410.0 12.1%

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
Offer Open 16-Feb-21
Offer close 18-Feb-21
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.

Also Read: Consistent Performing Largecap Stocks to invest in 2021

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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Suresh KP

4 thoughts on “RailTel IPO – Issue Dates, Price Band, Review and Analysis – Should you invest?”

  1. அருமையான தகவல்கள். பங்குச்சந்தையில் ஆர்வமுள்ளவர்களுக்காகப் பகிர்கிறேன். உங்கள் செய்திகளை தொடர்ந்து படித்து வருகிறேன். சிறப்பான செயல்பாடுகள். நன்றி, வாழ்த்துகள் திரு Suresh KP

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