Come Monday, the Indian Railways will hit the country's stock markets with its fourth and largest Initial Public Offer (IPO), that of the IRCTC worth over Rs 635 crore.
The state-run firm's IPO will open on September 30 with a price band of Rs 315-Rs 320 per share taking the issue size to Rs 635.04 to Rs 645.12 cr. The offer size in terms of amount makes it the highest among all the railway offerings till date.
Till now, the Indian Railways has come out with three IPOs of its subsidiaries namely Rail Vikas Nigam Limited (RVNL), (Rail India Technical and Economic Service) RITES and (Indian Railway Construction Company Limited) IRCON.
Interestingly, RVNL's IPO had the highest amount size till date of Rs 477.11 crore, followed by IRCON at Rs 466.93 crore and by RITES at Rs 460.44 crore.
An IPO is a financial instrument through which an unlisted company offers shares to the public first time. The funds raised are used for various purposes, like working capital, debt repayment and acquisitions.
In terms of IRCTC's IPO, the issue comprises an offer for sale of 2,01,60,000 shares of Rs 10 face value. Of the total, 1,60,000 equity shares were reserved for employees.
Consequently, the total share dilution constitutes to about 12.60 per cent of IRCTC's paid up equity share capital. The minimum bid lot of the IPO is 40 equity shares, thereafter orders can be placed in the multiples of 40 equity shares.
All proceeds from the offer will go directly to the selling shareholder.
The firm has consistently made profits over the years. In FY 2019, its net profit rose to Rs 272.6 crore from a profit of Rs 220.62 crore reported for FY18.
Moreover, the company's revenue from operations has grown to Rs 1,867.88 crore in FY19 from Rs 1,470.46 crore earned during FY18.
The state-run entity is the only entity authorised by Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India.
Currently, it operates in four business segments, namely, Internet Ticketing, Catering, Packaged Drinking Water and Travel and Tourism.
Besides, it has diversified into other businesses, including non-railway catering and services such as e-catering, executive lounges and budget hotels.
In addition, the company operates one of the most transacted websites in the Asia-Pacific region with volume averaging 25 to 28 million per month during the five months ending August 31, 2019.