RailTel Corporation of India's initial public offering is be the second public issue from the government and the seventh IPO of the year 2021.
Indian Railway Finance Corporation, Indigo Paints, Home First Finance Company and Stove Kraft have already listed on the bourses. Brookfield India REIT will make its market debut on February 17 and Nureca opened its public issue on February 15.
ICICI Securities, IDBI Capital Markets & Securities and SBI Capital Markets are the lead managers to the issue.
Here are 10 things to know before subscribing to RailTel Corporation of India IPO:
1) The IPO
The public issue comprises up to 8,71,53,369 equity shares of the face value of Rs 10 each and is a complete offer for sale by the Government of India.
Investors can bid for a minimum of 155 equity shares and in multiples of 155 thereafter.
2) Opening and closing dates
The public issue will open for subscription on February 16 and will close on February 18. The issue will also open for a day on February 15 for anchor investors.
The share allocation will take place around February 23 followed by unblocking of funds from ASBA account on February 24. Eligible investors will get shares on February 24 or 25 and the stock will get listed on February 26.
3) The price band
The company and the government, in consultation with merchant bankers, have fixed the price band at Rs 93-94 a share. In the higher price band, the minimum application size for retail investors comes to Rs 14,570.
4) Fund raising
The government is going to raise Rs 819.24 crore by selling a stake in RailTel.
5) Objects of Issue
The company will not receive any proceeds from the offer and the funds would be received by the selling shareholder, which is the government.
The main object of the offer is to carry out the disinvestment of 8,71,53,369 equity shares held by the Government of India.
Nureca IPO: Top 10 things to know before subscribing the issue
6) Company profile
RailTel Corporation is an information and communications technology (ICT) infrastructure provider and one of the largest neutral telecom infrastructure providers in the country, owning a pan-India optic fibre network on exclusive right of way (ROW) along railway tracks. It is a Mini Ratna (Category-I) Central Public Sector Enterprise, wholly-owned (100 percent) by the Government of India and under the administrative control of the Ministry of Railways.
The company was incorporated in September 2000 to modernise the telecom system for train control, operation and safety and to generate additional revenues by creating nationwide broadband and multimedia network by using the right of way along railway tracks.
As of January 2021, its optical fibre network covered 59,098 route kilometers and 5,929 railway stations. It operates data centres in Gurugram, Haryana and Secunderabad, Telangana to host and collocate critical applications for customers including the Indian Railways.
In addition to strategic and critical network infrastructure services, RailTel also undertakes various ICT projects for the Indian Railways, the Centre and state governments, including various train control system projects for Indian Railways.
The company offers a diverse range of services across industries and its portfolio can be broadly classified as telecom network services, telecom infrastructure services, managed data center and hosting services and projects (system integration services).
The company is in the process of carrying out a project in Haryana for a state agency, where it is required to supply, install and commission IP-MPLS and MPLS routers at various sites under the state WAN and also supply, install and commission switches, servers and firewalls and undertake facility management services for management of the common IT infrastructure.
The company is working on a number of projects. These include the Kerala Fibre Optic Network project where the company is a part of the consortium that involves provisions of scalable and resilient optic fibre across Kerala.
7) Competitive strengths
RailTel believes that the company has the following competitive strengths:
a) It is among the largest neutral telecom infrastructure providers in India with pan-India optic fiber network.
b) It offers a diversified portfolio of ICT services and solutions ,including MPLS-VPN, leased lines services, TPaaS, eOffice services and data center services, large network hardware system integration, software and digital services.
c) It is a key partner to the Indian Railways in digital transformation.
d) It has experience in executing projects of national importance, with a robust pipeline of projects.
e) The company has a consistent record of financial performance and growth.
f) RailTel is professionally managed, with strong corporate governance and senior management team with significant industry experience.
a) The company intends to continue to expand telecom services and deploy latest technologies.
b) It intends to further diversify services and solutions with a focus on Indian Railways.
c) It intends to expand services outside India.
RailTel has been profitable since fiscal 2007 and has paid dividends since fiscal 2008. Its operations have been funded entirely by internal accruals since fiscal 2013 and is a debt-free company.
Its revenue from operations has grown at a CAGR of 7.47 percent during FY18-FY20 and were at Rs 537.4 crore in the six months ended September 2020. In FY20, it reported the highest net profit margin among key telecom companies and key IT/ICT companies in India, with a net profit margin of 12.50 percent while net profit margin was 8.48 percent in the six months ended September 2020.
It ranked first in terms of operating profit margin among the key IT/ICT Companies in India in FY20.
10) How does it stack up against peers
Here is an assessment of the key telecom service companies in India, which include Bharti Airtel, BSNL, Mahanagar Telephone Nigam (MTNL), RailTel, Reliance Jio Infocomm, Tata Communications and Vodafone Idea:
An assessment of the key IT and ICT companies in India, which include HCL Infosystems, RailTel, Sify Technologies, Tata Communications and Telecommunications Consultants India (TCIL) follows;
Puneet Chawla is the Chairman and Managing Director of the company since December 2018. He is an IRSSE officer (batch of 1985). Prior to joining RailTel, he held positions such as Executive Director (Safety) in the Railway Board of Ministry of Railways, Government of India, Divisional Railway Manager, Ajmer, Chief Project Manager, Indian Railway Project Management Unit, General Manager, Rail Vikas Nigam Limited.
Sanjai Kumar is the Director (Network, Planning and Marketing) and whole-time director. Anand Kumar Singh is the Director (Finance) as well as a whole-time director and Chief Financial Officer. He has over 33 years of experience in finance and accountancy. Prior to joining the company, he was the executive director (finance) at IRCON International and also worked in Bokaro Power Supply Company and Damodar Valley Corporation.
Umesh Balonda and Vinay Srivastava are the part–time government director and nominee director, while Rashmi Jain and Chinnasamy Ganesan are the part–time (non–official) director as well as independent directors.