Way2Wealth has come out with its report on IRCTC. The research firm has recommended to "Subscribe'' the IPO in its research report as on September 27, 2019
The IPO is part of the government’s plans to take rail entities public and disinvestment programme. In 2017, the Cabinet Committee on Economic Affairs approved the listing of five railway companies – IRCON International, RITES, RVNL, IRFC and IRCTC. IRCON
International and RITES have already been made their market debut in the market while RailTel and IRFC (Indian Railway Finance Corporation) might also hit the markets soon The government will raise ~`6400 mnfrom IRCTC IPO after divesting its 12.5% stake.
Valuation and Outlook
IRCTC is the only entity authorized by Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India. During FY19, IRCTC's revenues increased 25% to `19,567mn while profit grew 23.5% to `2726mn over the previous year. The company has a superior financial metrics compared to listed domestic peers such as International Travel House (ITH) and Thomas Cook (India) and it a debt-free company with a cash balance of nearly `11,400mn. At the price band of `315-320, the asking valuation for IRCTC is ~19x P/E (FY19). We believe the valuation is reasonable and the company has the potential to offer higher returns to the investors over the next 12-18 months. We recommend investors with a long-term investment horizon to SUBSCRIBE to the issue
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