RailTel IPO Review – 5 Important Things To Know Before You Subscribe IPO

  • Post last modified:February 25, 2021
  • Post category:Stock Market
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RailTel IPO is scheduled to launch on Tuesday, 16 February 2021, and will get close on February 18, 2021, in the price band of Rs 93-94 per share equity. Through the issue the RailTel Corporation of India Limited is looking to raise ₹ 811–819 crores from the market. In December 2018, the cabinet had approved IPO of RailTel Corporation of India by diluting up to 25 % government stake.

Railtel is the 7th IPO getting opened for subscription in 2021 after IRFC IPO, Indigo Paints IPO, HFFC IPO, Stovekraft IPOBrookfield India IPO & Nureca IPO.

The Issue Size is of 8,71,53,369 Equity Shares with minimum bid lot quantity of 155 and in multiples thereof. The RailTel Corporation of India Limited is an information and communications technology (“ICT”) infrastructure provider and is one of the largest neutral telecom infrastructure providers in India.

The company is a Mini Ratna (Category-I) Central Public Sector Enterprise, wholly-owned by the Government of India and under the administrative control of the Ministry of Railways (MOR). The equity shares of RailTel are proposed to be listed on both BSE and NSE.

The latest Grey market premium price (GMP) for RailTel IPO’s were seen up by more than 52% and is current trading as of today at Rs.50. This means people are expecting it to open on listing day to be at least at Rs. 145 or more.

Having said that, I would like to add here that many people underestimated Stovekraft IPO before it’s launch, however the current share price is trading at Rs.508 above the pre-open IPO price band of Rs.384. Likewise for Nureca IPO similar things are been seen on the other hand for IRFC IPO many people recommended a BUY and GMP were also seen at quite high range but unfortunately it open at a discount price and is currently trading at Rs.25.40. 

Here is the thing no one can tell you whether the IPO will going to make a stellar debut or not, it is you who have to decide based on available information about the company. Moreover the IPO’s now a days are very hot market every one wants to earn some quick money on listing day itself and there is nothing wrong about it.

Having said that, one must not forget to check the financials and do not fall for any recommendation from anyone, it is you hard earned money, you should decide whether to opt for the IPO or not.

Therefore, whenever you are buying IPO make sure the money invested is not the one which you my need it urgently, always use extra money which you may not require in near future.

Now, coming back to the Railtel IPO let us talk about in brief about the company and its financials and other details step by step.

 



 

About Railtel Corporation Of India Limited:

RailTel Corporation of India Limited got incorporated in India on 26th September 2000 is a public sector
undertaking (PSU). The company is promoted by and is under administrative control of Ministry of Railways.

RailTel Corporation a “Mini Ratna (Category-I)” PSU is one of the largest neutral telecom infrastructure providers in the country owning a Pan-India optic fiber network on exclusive Right of Way (ROW) along Railway track. The OFC network covers all important towns & cities of the country and several rural areas covering 70% of India’s population.

RailTel with strong nationwide presence is committed to bring cutting edge technology and offer innovative services to the Indian Telecom market. RailTel is in the forefront in providing nationwide Broadband Telecom & Multimedia Network in all parts of the country in addition to modernization of Train operations and administration network systems.

The Main objective of the company is:

  • To facilitate Railways in expeditiously modernizing their operation and safety systems and network by providing state of art communication infrastructure.
  • To plan, build, develop, operate and maintain a nationwide broadband telecom and multimedia network to supplement national telecom infrastructure to spur growth of telecom, broadband and IT enabled value-added services in all parts of country specially rural, remote and backward areas.
  • To generate revenue through commercial exploitation of its telecom network.

 

RailTel Corporation of India Limited is having following operations:

  1. Telepresence Services – RailTel offers enterprise class Full High Definition (HD) & secure multi-point managed video
    conferencing service that enables users a virtual, face to face meeting experience.
  2. Data Centre Services – RailTel has its own Data Centers at Secunderabad and Gurugram.
  3. Retail Broadband – Rail Wire is a retail Broadband initiative of the RailTel.
  4. Leased Line Service
  5. Virtual Private Network Service
  6. Internet Leased Line Service
  7. Rack and Space Collocation Service
  8. Tower Co-location Service

 

As of 30 June 2020, it has covered an optic fiber network over 55,000 Km and 5677 railway stations. The company has data centers in Haryana, Gurugram, Secunderabad, and Telangana. The company is profitable since 2007.

Now, that you have a brief understanding of what exactly the Railtel does as an PSU company let us checkout some of the financials expect of RailTel.

 



 

Financials Of Railtel Limited:

 

Financials Of Railtel Limited

 

The upper price band of Rs 94, the issue is priced at a 33.1x P/E (price to earning) ratio and 2.2x P.BV (price to book value) it is little expensive for a government company. Having said that, Company has priced its issue at 21.4x PE on an FY20 trailing basis, which is very reasonable.

Company’s margins & return ratios are better compared to other telecom players in India. The company also has a strong financial position (debt-free) and has been consistently paying dividends since 2008. 

The NAV per equity share (net asset value) for RailTel limited in FY2020 is at Rs. 42.67, whereas EPS ( earning per share) is at Rs.4.40. The RoNW (%) (Return on net worth) IN FY 2020 is at 10.30. 

 

Financials Of Railtel Limited
Source : RHP

 

In Fiscal 2020, RailTel reported the highest net profit margin of 13%, owing to a zero debt in Fiscal 2020. Reliance
Jio Infocomm Limited and Tata Communications Limited followed RailTel with 10% and 4%, respectively.

RailTel ranked considerably well in operational profitability in Fiscal 2020. RailTel’s operating profit margin was
30% in Fiscal 2020, whereas Vodafone Idea Limited and Reliance Jio Infocomm Limited was 33% and 40%,
respectively

In Fiscal 2020, Railtel registered the highest return on capital employed (“RoCE”) of 14%, followed by Reliance
Jio Infocomm Limited at 13% in the same period.

Among the Key IT/ICT Companies, Tata Communications Limited had the highest operating revenues.

 

RailTel IPO Review - 5 Important Things To Know Before You Subscribe IPO
Source: RHP
RailTel IPO Review - 5 Important Things To Know Before You Subscribe IPO
Source: RHP

 

In Fiscal 2020, RailTel had the highest operating profit margins of 30% among the Key IT/ICT Companies. Tata
Communications Limited and Sify Technologies Limited had an operating profit margin of 27% and 18%,
respectively

In Fiscal 2020, net profit margin of 13% of RailTel was the highest among the Key IT/ICT Companies. Tata
Communications Limited and Sify Technologies Limited had positive net profit margins of 4% and 3%,
respectively, Also RailTel had zero debt in Fiscal 2020.

As of March 31, 2020, RoCE of RailTel Corporation of India, which was 14%, was the highest among the Key
IT/ICT Companies. RoCE of Sify Technologies and Tata Communications was 11% and 9.5%, respectively.

In the coming years, Indian Railways is focusing enhancing passenger experience by enabling suitable technology to
introduce SMART coaches on its network.

The high speed mobile communications network is aiming to include modern features like CCTVs with facial recognition, emergency talk-back system, Wi-Fi infotainment system, automatic plug-door and step control.

Let us now talk about All the Railtel IPO related details.

 



 

RailTel IPO Details:

 

RailTel IPO Details

 

Objects of the Issue:

This is an Offer for Sale, The Company will not receive any proceeds from the Offer and all the proceeds shall
go to the Selling Shareholder.
The President of India, acting through the MoR, is the Promoter as well as the Selling Shareholder in the Offer.

 

Frequently Asked Question (FAQ):

1.What Is The Symbol For RailTel Corporation of India Limited (RCIL)?

Ans: The Symbol for RCIL is RAILTEL

2.When Railtel IPO Coming?

Ans: The Issue Period for Railtel IPO is 16-Feb-2021 to 18-Feb-2021.

3. Post Modification Period For Railtel IPO?

Ans: The Post issue Modification Period for IPO is 19-Feb-2021 (10.00 A.M. to 11.00 A.M.).

4. What Is The Cut-off Time Period For UPI Mandate For Railtel IPO?

Ans: The Cut-off time for UPI Mandate Confirmation is 19-Feb-2021 (upto 12:00 PM).

5. What Is The Issue Type For Railtel IPO?

Ans: The Issue Type is 100% Book Building.

6.What Is The Price Band For Railtel IPO?

Ans: The Price (Band) Range for Railtel IPO is Rs.93 to Rs.94 per equity share.

7. What Is The Lot Size For Railtel IPO?

Ans: The Bid Lot i.e. Minimum Order Quantity (lot size) for RailTel IPO is of 155 Equity Shares and in multiples thereof 155 Equity Shares.

8. Who Are The Book Running Lead Managers For Railtel IPO?

Ans: The Book Running Lead Managers are, ICICI Securities Limited, IDBI Capital Markets & Securities Limited, SBI Capital Markets Limited

9. What Is The Face Value For Railtel IPO?

Ans: The Face Value is of Rs. 10 whereas The Tick Size is of Rs.1

10. What Is The IPO Market Timings For Railtel IPO?

Ans: The IPO Market Timings is 10.00 a.m. to 5.00 p.m.

 

Apart from above points:

The Maximum Subscription Amount for Retail Investor is Rs. 2,00,000

The Maximum Subscription Amount for Eligible Employee Rs. 5,00,000

The Maximum Bid Quantity for QIB Investors 43,326,683 equity shares

The Maximum Bid Quantity for NIB Investors 12,998,006 Equity Shares

The Name of the Registrar is KFin Technologies Private Limited

The Address of the Registrar is Selenium Tower-B Plot 31 & 32, Gachibowli, Financial District, Nanakramguda, Serilingampally, Hyderabad 500 032 Telangana, India

The Contact person name number and Email id is – M Murali Krishna, +91 40 6716 2222, [email protected]

 



 

Where To Check RailTel IPO Application And Allotment Status?

As an investor or trader generally we are curious and anxious to know the results of the application as soon as possible. To ease the anxiety, both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have come up with dedicated pages and links which investors can use.

NSE

The NSE has an IPO bid verification module. It can be used to verify the IPO application details uploaded on the exchange bidding system by your member/bank. The data of the bid details uploaded by the member/bank would be available on T+1 day (where T would be date receipt of bid on NSE platform).

In addition, the data would be available until six days after the issue closure date. This gives the investor enough time to verify the data and instruct the member/bank to make any changes, if required.

Exchange will also provide allotment information as provided by the registrar to the issue.

An investor can avail this facility by registering using his/her PAN details. After registration, the investor will receive an email notification from NSE on the registered email address. That email will provide the login details.

The following link can be used for the same:

https://www.nseindia.com/products/dynaContent/equities/ipos/ipo_login.jsp

BSE

The BSE has also come up with a similar platform.

This unique facility allows investors to verify the status of their application submitted to a Trading Member or a SCSB (Self-Certified Schedule Banks).

The investor can check his application status/information on the website until one week after issue close.

The following link can be used by investors:

https://www.bseindia.com/investors/appli_check.aspx

 

Important Things To Keep In Mind Before Applying For IPO’s:

  • Try to fill for the same IPO online from different DP ID i.e. if in your family have more than 1 account you can possibly get the allocation done in case of over subscription.
  • You should have a good knowledge of the sector and the company you are planning to invest.
  • Analysis of the company’s balance sheet is very crucial. A clear understanding of the company’s future projects and vision is very necessary to know whether it will have a sustainable future.
  • Investment decision has to be taken carefully and not in a hurry.
  • Read as much as you can about the company, its objectives for launching the IPO, its past history in business and its futures prospectus.
  • Don’t go for hype in the news, your analysis should be based on facts rather than gossips and rumors.
  • Many IPOs are oversubscribed. What this means is that the demand for shares is much higher than the shares available for sale. In such a situation, it is no surprise that many investors fail to get any shares allotted to them. This is why it is advisable to apply for IPO shares on the last day of bidding. This way, one can have a good estimate on how large the subscription will be. Also, in that case, one should bid for just one lot and not unnecessarily lock up their capital.

 



 

Conclusion:

As per Census 2011, India’s youth (15 to 24 year age group) constitute one-fifth (19.1%) of India’s total population
at 231.95 million. The share of the youth in the total population has been increasing continuously, from 30.6% in 1971 to 34.8% in 2011.

India’s youth is expected to be 34.1% of its total population by 2021 from 422.0 million in 2011 to 479.4 million in 2021. The youth in India will continue to drive demand for on-the-move internet access which will be the key target market for data services

Let us talk about the strength and weakness of Railtel corporation of India in brief.

Some of the qualitative factors and strengths of Railtel Limited:

  1. Among the largest neutral telecom infrastructure providers in India with pan-India optic fiber network
    Diversified portfolio of services and solutions.
  2. Key partner to the Indian Railways in digital transformation.
  3. Experience in executing projects of national importance with a robust pipeline of projects Strong track record of financial performance.
  4. Professionally managed with strong corporate governance and senior management team with significant
    industry experience.

Some of the Risk Factor for Railtel Limited:

  • The telecommunications industry in India is highly regulated and changes in laws, regulations or governmental policy could potentially adversely affect RailTel business, prospects, financial condition, cash flows and results of operations.
  • If Railtel do not continue to provide telecommunications or related services that are technologically up to date, they
    may not remain competitive, and their business, prospects and results of operations may be adversely affected.
  • Telecommunications carriers that Railtel do business with, could suffer from decreasing margins and financial
    distress, which may negatively impact their business.
  • The Covid-19 pandemic has already resulted in economic slowdown throughout the world including India. The
    operations of the Railtel have also been significantly impacted following a nationwide lockdown by the Government of India.

 



 

Therefore, it is always advisable to go through RailTel IPO – DRHP to know in detail about the company.

The only thing which should be bothering you is the research you did before applying for the IPO. Investing in IPO is risky as well as profitable. Having said that you also need to keep in mind important things mentioned above before applying to IPO’s as the risk is always involved.

For More Information Do Checkout Basics of IPO and FAQ Here.

Do Checkout 2020 IPO Performance List – Despite Corona Most IPO Listed Gave Positive Returns!!

Checkout the List Of 5 Best Stock Brokers In India 2021 here

Want to know how much you need to save to reach a specific target than do check moneycontain monthly savings goal calculator here.

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Note: Please do your own research and make investment. Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only and intended to give information. All investments are subject to risks, which should be considered prior to making any investments. The above details are compiled from information available on public platforms. These are not buy or sell recommendations.

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