RailTel Corporation of India, one of the largest neutral telecom infrastructure providers in India, is likely to list with a 10-25 percent premium on February 26 given its monopolistic business, diversified portfolio of service and solution, and key position as a partner in digital transformation of the Indian Railways, experts feel.
The state-owned entity has raised around Rs 819 crore through public issue which was subscribed 42.4 times during February 16-18. It was a complete offer for sale by the government, so all the money will go to the government.
"We believe RailTel Corporation issue gives investors an opportunity to hold Mini Ratna (Cat-I) which has monopolistic business opportunity and a key partner to the Indian Railways in digital transformation. Looking at the strong subscription demand one can expect a decent listing gain with 20-25 percent listing premium on allotment price of Rs 94," Prashanth Tapse, AVP Research at Mehta Equities told Moneycontrol.
"We believe the listing premium is justified as we are optimistic on RailTel business model," he said.
RailTel Corporation is an information and communications technology (ICT) infrastructure provider. It provides services like telecom network services national long distance services, ISP, telecom infrastructure services, managed data center and hosting services & projects (system integrated services).
The company operates data centres in Gurugram, Haryana and Secunderabad, Telangana to host and collocate critical applications for customers including the Indian Railways. As of January 2021, its optic fiber network covers over 59,098 route kms and covers 5,929 railway stations across towns and cities in India.
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"We expect RailTel Corporation to list at a small premium of around 10-15 percent above the issue price," Keshav Lahoti, Associate Equity Analyst at Angel Broking said, while Astha Jain, Senior Research Analyst at Hem Securities expects RailTel to list at 11-12 percent premium to issue price.
In the grey market, the stock traded at a premium of Rs 10-17 over and above the issue price of Rs 94 fixed by the company in consultation with merchant bankers.
The said premium has been dropped significantly in last few sessions due to market volatility, from Rs 25-35 seen during the issue opening.
RailTel was formed to undertake Indian railways' tasks of expeditiously modernising their entire telecommunications system for train control, operation and safety. Railways have agreed to authorise RailTel to use their right of way for the purpose of establishing and optical fiber cable (OFC) network by laying, amongst others, cables and pipes, and transfer their existing OFC assets to RailTel.
The agreement between Ministry of Railways and RailTel also dictates that RailTel will commercially exploit the surplus capacity of the network while the Ministry of Railways will continue to make captive use of the same, thus making RailTel a key network for the Indian Railways. "Accordingly, there are significant opportunities for companies, such as, RailTel pursuant to the Indian Railways ambitious plans. Given the Railway plan for modernization of its network, we expect RailTel to benefit from the opportunity going ahead," said KR Choksey.
It would be the seventh IPO listing in current year after Indian Railway Finance Corporation, Indigo Paints, Home First Finance Company, Stove Kraft, Brookfield India REIT and Nureca.
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