IRCTC IPO opens today: Know the Price Band, Lot Size and other details

IRCTC or Indian Railway Catering and Tourism Corporation's IPO (initial public offer) worth Rs. 645-crore opens for subscription today. The issue saw a strong demand during the recent rebound in equity market sentiment after the corporate tax cut. Many analysts have suggested "subscribe" to IRCTC IPO, citing valuation comfort. The IPO closes for subscription on 3rd October.

After the IPO, the Indian Government's stake in IRCTC will come down to 87.40 per cent. IRCTC is the only unit authorised by Indian Railways to deliver catering services to railways, online railway ticketing service and packaged drinking water at railway stations and trains in the country.

IRCTC IPO - Price Band

The price band of ₹640 crore IRCTC IPO has been decided at ₹315-320 per share, but retail investors and eligible employees would get a discount of ₹10 per share. So, they can get one share for Rs 305-310.

IRCTC IPO - Allotment and Listing Date

9th October is the tentative date of allotment of IRCTC shares. These IRCTC shares will get listed on both BSE and NSE, and 14th October is the tentative date of this.

IRCTC IPO - Lot Size

The minimum order quantity or the lot size is fixed as 40. So, orders can be placed in the multiples of 40 shares. That means for the price band of ₹305-310 per share retail investors need to spend Rs 12,200-12,400 per one lot.

IRCTC IPO – Retail Portion

35% of the IRCTC IPO has been assigned to the retail portion. Retail investors can bid up to ₹2 lakh shares. The maximum number of shares that retail investors can bid is 640 or 16 lots at lower price band Rs1,95,200 and 640 or 16 lots at upper price band Rs 1,95,200-1,98,400.

IRCTC IPO – Analysts' Recommendations

Brokerage Angel Broking gave a "subscribe" rating to the IRCTC IPO. Angel Broking said in a note that the recent tax reduction by the government and the increase in revenue from the service charge for online ticketing would improve IRCTC's profitability substantially going forward.

"There is also a significant opportunity for the Company to ramp up the catering business given a huge captive audience which is currently being underserved. Increasing business volumes from catering and packaged drinking water businesses, along with service charge for online ticket booking will drive earnings growth for the company between FY19-21," Angel Broking said.

ICICI Securities said, "The stock is available at a price to earnings multiple of 10x (FY21E EPS), which we believe looks attractive from the perspective of future earnings growth."

CEO of SAMCO Securities & StockNote, recommends subscribe to the IRCTC IPO, "One should subscribe to IRCTC's IPO given the reasonable valuations at 19 times earnings, an asset-light model and high earnings visibility."