IRCTC IPO: Rs 645cr issue to open on Sept 30, price band at Rs 315-320 per share


IRCTC IPO: This year’s biggest public-sector IPO is just around the corner. State-owned IRCTC (Indian Railway Catering and Tourism Corporation) has set the price band for its IPO at Rs. 315-320. 

Through the IPO, the government plans to raise between Rs. 635 – 645.12 crore which is set to open for subscription on September 30 and will close on October 3. 

Through this IRCTC IPO, Ministry of Railways is planning to sell 12.50 per cent stake in the Indian Railway or better to say 2 crore shares representing 12.50 per cent of total paid-up equity. There is also an additional employee reservation portion of 1.6 lakh shares after which this offer will be 12.6 per cent of total paid-up equity. 

In this sale issue, IRCTC won’t receive any proceeds from the offer. Total proceeds will to the selling shareholder. 

This state-owned corporation provides catering services to railways, online railways tickets and packaged drinking water at railway stations and trains in India. 

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This IRCTC’s IPO has minimum bid lot decided at 40 equity shares and in multiples of 40 equity shares thereafter. 

The good news is for retail investors and employees of IRCTC, they both will get shares at a discount of Rs. 10 per share to final offer price. 

Yes, Securities(India), SBI Capital Markets and IDBI Capital Markets and Securities are the book running lead managers to this IPO issue. 

This upcoming stake sale in IRCTC is part of the government’s plan of divestment programme set in budget 2019. 

If you remember, this year in July, Finance Minister Nirmala Sitharaman has set disinvestment goal of Rs. 1.05 lakh crore for FY20. This was way more than Piyush Goyal’s interim budget target of Rs. 90,000 crore. This IRCTC IPO is the first step in achieving that goal. 

In April, we have already seen RVNL’s (Rail Vikas Nigam Limited) 12.2 per cent stake sale. Through this sale, Government has raised about Rs. 480 crore. 

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