RITES made a debut at the stock exchange today and is, currently, trading at a premium of 32 per cent at Rs 222 after getting listed at Rs 190 in the morning trade. The Railways consultancy firm got subscribed more than 67 times on the last day of bidding given the strong response from investors. The price band for the issue was fixed at Rs 180-185 per share. RITES is the first state-owned firm to hit the IPO market in the current fiscal.
Arafat Saiyed, AVP-Research, Reliance Securities, said, “After a flat debut of 3 per cent, the stock price of RITES rose to Rs 218 per share in the morning trades. Assuming moderate revenue CAGR of 10 per cent and PAT CAGR 8 per cent through FY17-20E, the stock at current price is valued at 10x FY20E earnings, which appears to be justified considering its unique business model, steady growth and healthy return ratios. Hence we continue to remain positive on the stock.”
The company got incorporated in 1974 and is a wholly owned government company, under the aegis of Indian Railways. It is a consultancy organization in the fields of infrastructure, transport, and other related technologies.
The company received bids for over 169 crore shares against the total issue size of 2.52 crore shares. The category set aside for qualified institutional buyers (QIBs) was subscribed 71.72 times, non-institutional investors 194.56 times and retail investors 14.72 times.
RITES exports railway locomotives, coaches and other equipment, which are manufactured by the Indian Railways and is responsible for inspection of various materials and equipment purchased by the Indian Railways.
The IPO planned to raise Rs 466.2 crore by offloading 12 per cent of its stake. The company’s order book was at Rs 4,800 crore as of March 2018, which is 3.5 times FY 17 revenue. Elara Capital (India), IDBI Capital Markets & Securities, IDFC Bank and SBI Capital Markets are managing the issue.