Indian railways arm enjoys bumper IPO subscription in slowing economy

MSTC

03/10/2019 13:59

BENGALURU, Oct 3 (Reuters) - State-run Indian Railway
Catering and Tourism Corp's (IRCTC) initial public offering
(IPO) to raise 6.45 billion rupees  ($90.89 million) was
subscribed nearly 112 times by the end of the book-running
process, stock exchange data showed.
    Investors bid for 2.25 billion shares of the company,
compared with 20.2 million shares on offer, according to data
from the National Stock Exchange, as of 1230 GMT on Thursday. (https://bit.ly/2oPfEUU)
    The overwhelming response comes amid slowing growth in
Asia's third-largest economy, which has hit sales of everything
from cars to cookies, prompting the government to step in with
deep cuts in corporate taxes and a raft of other measures to
revive growth.
    "IRCTC could see better valuation and a jump in EPS from
second half of FY20 due to restoration of service charges which
were halted after demonetization and the recently announced
corporate tax rate-cut," said Deepak Jasani, head of retail
research at HDFC Securities.
    "It is also partly in the internet space and such companies
are witnessing heightened investor interest."
    The company is authorised by the railway ministry to offer
Indian railway tickets online, offer catering service and
exclusively manufacture and supply packaged drinking water at
railway stations and on trains in India.
    IRCTC operates in four business segments and also offers
e-catering services to passengers via a mobile phone
application.
    The initial share sale is part of the government's
divestment process to help meet its target to raise 800 billion
rupees this fiscal year. In January, sources told Reuters that
the government plans to meet this target through the sale of
state-owned assets.  urn:newsml:reuters.com:*:nL3N1ZM42O
    The government will hold a 87.4% stake in IRCTC after the
IPO.
    Earlier this year, government-run Rail Vikas Nigam Ltd
 RAIV.NS  and MSTC Ltd  MSTC.NS  failed to garner as much
attention as IRCTC, but were fully subscribed at the end of the
subscription period.  urn:newsml:reuters.com:*:nL3N21L30V  urn:newsml:reuters.com:*:nL3N21736L
    The issue for IRCTC, which also handles holiday packages and
pilgrimage tours for the Indian railways, comprises an offer for
sale of 20.2 million shares at a price band of 315-320 rupees
per share.
    According to the red herring prospectus, IRCTC will not
receive any proceeds from the offer and all proceeds will go to
the government.

 ($1 = 70.9630 Indian rupees)

 (Reporting by Chandini Monnappa in Bengaluru; Editing by
Shounak Dasgupta)
 ((Chandini.M@thomsonreuters.com; 910867497919;))