RAILTEL IPO 2021 : Dates, Price Band, Business Strategy and Other Information

RAILTEL IPO 2021 : Dates, Price Band, Business Strategy and Other Information

Company Details And Business Strategy

Railtel is the gigantic leader of the telecom infrastructure provider industry. It provides network facilities across all the towns and cities of India and covers 70% of the Indian population. Railtel owns the exclusive ROW along all the railway tracks in India. It started in 2000. Railtel has more than 58000 kilometers of coverage spread across more than 5800 railway tracks.

Railtel has an exclusive relationship with Railways and serves the services with a dynamic range of services as well. It provides a video surveillance system at railway stations and in trains. It also provides e office services. Railtel implements long and short haul connectivity between stations and helps various organisations in maintaining records for the same. Hence it is a major ICT service provider and telecom infrastructure developer in the nation. It has its regional offices in Kolkata, Mumbai, New Delhi and Secunderabad. Its main office is set up in New Delhi.

It created a subsidiary in Aug 2014 named REL (Railtel Enterprise limited). The Company was set up with a view of expanding project execution of telecom and signalling. It uses the most advanced technologies like DWDM and MPLS networks.

Highlights On IPO

The Railtel IPO is set to launch on 16th Feb, 2021. The issue type would be book built issue. The subscription ends on 18th Feb, 2021. The face value per share is set at 10 Rs. per share. The price band is set at 93 to 94 Rs. The minimum lot size is 155 shares and the maximum lot size is 2015 shares. The issue is set to raise 819.24 Crore Rs. All the amount will be raised via offer for sale and no fresh issue option is available. The company would be listed at both BSE and NSE and the listing date is set at 26th Feb, 2021. The registrar for the company is Karvy Fintech Private Limited.

Tabular Representation Of IPO Details

IPO OPENING DATE 16th Feb, 2021
IPO CLOSING DATE 18th Feb, 2021
ISSUE TYPE Book Built Issue
Face Value per share 10 Rs. per share
IPO price band 93 Rs. – 94 Rs.
LOT SIZE 155 shares
MINIMUM ORDER QUANTITY 155 shares
ISSUE SIZE 819.24 crore Rs.
OFFER FOR SALE 819.24 Crore Rs.
FRESH ISSUE No fresh issue available
LISTING AT NSE, BSE
LISTING DATE 26th Feb, 2021

Financials For Railtel

Particulars (in million Rs.) 2019-20 2018-19 2017-18
ASSETS 23980 22278 23228
REVENUE 11662 10381 10211
NET PROFIT 1411 1353 1340

The financials of the Railtel gives a lot of assumptions. The company has a fluctuation in the asset holdings. Its asset holding has taken a down swing in 2018-19 period but however the revenue has managed to grow a bit. There has been a very minor change in the revenue stream of the company since 2017-18 and the company is not expanding upto its maximum capacity. The company has shown a stable N.P and revenue for past three years. The revenue has increased in 2019-20 period by 1000 million Rs. which is a good indicator for performance of Railtel. Also the net profits of the company has shown a growth of 100 million Rs. in 2019-20 period. Overall the company is really stable and producing a slowly increasing revenue and net profit stream.

The main focus is on the current year performance of the company. The train services were closed for a long time this year due to COVID crisis. This has given the company a hit as it has a large business with the MOR and the railways. Though the current year has not generated good business but the company has managed to gain a revenue of 5537 million Rs at the end of September quarter. Also the Net profit so far stands at 455 million Rs. This is a good sign as the company has maintained the revenues if we look by proportionate view. However the net profit has taken a hit this year. The net profit is less by 300 million Rs if we compare the current profit with the 2019-20 period.

Objectives For Launching IPO

The objectives behind the public issue are :

  • The government is constantly focusing on having disinvestment in government owned companies and this is a move in that direction. The government is initiating the investment plans and wants to get some additional money in its pockets by the public issue.
  • By this launch the company would achieve the price rise benefits and it would increase the income flow of the company. The reason behind the issue is not expansion plans or gaining public money for paying dues. The simple reason is getting the advantage of equity markets.

Important Dates

IPO OPENING DATE 16th Feb, 2021
IPO CLOSING DATE 18th Feb, 2021
IPO ALLOTMENT DATE 23rd Feb, 2021
REFUNDS 24th Feb, 2021
DEMAT A/C CREDITED ON 24th Feb, 2021
IPO LISTING DATE 26th Feb, 2021

Railtel IPO is going to launch its public subscription on 16th Feb, 2021 just after the Nureca IPO launch. The subscription ends on 18th Feb, 2021. The IPO allotment would be finalised on 23rd Feb, 2021 and the refunds would be initiated on 24th Feb, 2021. Also the DEMAT accounts of the shareholders would be credited on 24th Feb, 2021 if they get the allotment. The listing date is set at 26th Feb, 2021.

Promoter Holding and Lot Size Details

Railtel is owned by GOI.  President of India is the only promoter of Railtel. The president works through the help of the ministry of railways for running the company. The promoter holding pre-IPO launch is 100%.

The lead manager of the IPO are as follows :

  • ICICI Securities Limited
  • IDBI Capital Market Services Limited
  • SBI Capital Market Limited

The minimum lot size for the company is decided at 155 shares. This holding accounts to Rs. 14570. The maximum lot size is decided at 2015 shares. This amounts to Rs. 189410. Hence the company’s final holdings would be set as :

Shares Amount
Minimum 155 shares 14570 Rs
Maximum 2015 shares 189410 Rs

Pros

  • Railtel is a Government owned company with stable income stream.
  • Constantly profitable company with stable increase in revenues and net profits.
  • Revenues are consistent in COVID situation as well.
  • Leader in the networking and telecom infrastructure segment.
  • Exclusive dealing with the railway sector and handled by MOR.
  • Constant business assured due to government holding and working with the railways department.
  • Uses advanced technology to provide networking services.

Cons

  • Slightly unbalanced net profit is COVID situation
  • Stable asset base which indicates that the company is not expanding well.
  • Stable income flow indicating that the company has fixed sources of income and needs to develop passive income sources as well.

How to Apply for IPO with Zerodha ?

It is very easy to apply for an IPO now if you have a DEMAT account with Zerodha. Follow the steps below for the same :

  1. Logging into Zerodha console through its website or KITE platform.
  2. Clicking the IPO link present in the Portfolio section
  3. Click the RAILTEL IPO button and press the BID button
  4. Entering the details asked for like UPI ID, Quantity and price
  5. Submit the application form of IPO
  6. Visiting the application of UPI for approving the transaction

Now, applying for IPO online is possible with most of the Discount and online brokers.

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