State-owned Indian Railway Catering and Tourism Corporation (IRCTC) has made its entry into the stock market and is helping investors to double their investments in their initial public offering. The stock is valued at INR 644 which is a 101 percent increase over its issue price of INR 320 per share. Experts are encouraging the investors to book profits as the stock might fail to sustain its listing gains. This is the best listing since the debut of Avenue Supermart in March 2017 and second-best in 14 years. Avenue Supermarts, which owns DMart, listed 102 percent above its issue price in March 2017. The stock
closed at INR 743.8 on Monday, up 133 percent over its issue price. This is the best closing on debut in 12 years. “IRCTC has today managed to replicate the success of Avenue Supermarts in the primary market
where we saw bidder showing an appetite for the stock even after the stock doubling on Day 1 of listing,” said S Ranganathan, head of research, LKP Securities. The initial public offering of IRCTC was subscribed almost 112 times, making it the most successful share sale in over twenty months. The portion kept for high net worth individuals was subscribed over 354 times, while that reserved for retail investors got subscribed 14.65 times. This also marks the first time that a government issue got subscribed over 100 times. With a market cap of INR 11,728 crore and a price to earnings (PE) ratio of over 40 times, the stocks gain could be capped, according to the experts. “This euphoria might settle down at a certain level and then probably the stock could grow at 8 to 10 percent. It is fundamentally good business with no debt on the balance sheet and healthy cash of INR 1000 crore, good free cash flow having a 45 percent dividend payout. Right now the euphoria should settle down,” said Devang Bhat, an analyst at ICICI Direct.
For the financial year ended March 31, 2019, the company reported a net profit of 272.56 crores compared with the previous year’s net profit of INR 220.62 crore. The company, which is debt-free, had cash reserves of 1,140 crores.