IRCTC Initial Public Offer To Open Today. Should You Subscribe?

IRCTC or Indian Railway Catering and Tourism Corporation's Rs 645-crore initial public offer (IPO) will open for subscription today. IRCTC - the online ticketing arm of the Indian Railways - has set a price band of Rs 315-Rs 320 for the IPO. After the IPO, Government of India's holding in IRCTC will come down to 87.40 per cent. The IPO will close for subscription on October 3. The offer size in terms of amount makes it the highest among all the railway offerings till date. Investors can subscribe to the IRCTC IPO in the lots of 40 shares.

IRCTC IPO - Here's all you need to know about the IRCTC IPO today:

Till now, the Indian Railways has come out with three IPOs of its subsidiaries: Rail Vikas Nigam Limited (RVNL), Rail India Technical and Economic Service (RITES) and IRCON (Indian Railway Construction Company Limited). 

The IRCTC IPO will be the largest public offer by the Indian Railways so far.

The RVNL IPO was worth Rs 477.11 crore, whereas the IRCON and RITES public offers raised Rs 466.93 crore and Rs 460.44 crore respectively.

The IRCTC IPO comprises an offer for sale (OFS) of 2,01,60,000 shares of the face value of Rs 10. Of these, 1,60,000 are reserved for employees. All proceeds from the offer will go directly to the selling shareholder.

The total share dilution constitutes to about 12.60 per cent of IRCTC's paid-up equity share capital.

The IRCTC IPO can be subscribed to in the lots of 40 shares. That means orders can be placed in the multiples of 40 shares.

IRCTC IPO - Angel Broking Recommends "Subscribe" 

Brokerage Angel Broking has assigned a “subscribe” rating to the IRCTC IPO. The recent tax reduction by the government and the increase in revenue from the service charge for online ticketing will improve IRCTC's profitability substantially going forward, Angel Broking said in a note. 

“There is also significant opportunity for the Company to ramp up the catering business given a very large captive audience which is currently being underserved. Increasing business volumes from catering and Packaged drinking water businesses, along with service charge for online ticket booking will drive earnings growth for the company between FY19-21,” Angel Broking said. 

IRCTC Background

State-run IRCTC is the only entity authorised by the Indian Railways to provide catering services to railways, online railway tickets, and packaged drinking water at railway stations and trains in India. Currently, IRCTC operates in four business segments: Internet Ticketing, Catering, Packaged Drinking Water and Travel and Tourism.