The initial public offering of state-run Indian Railway Catering and Tourism Corp. (IRCTC) was subscribed more than 100 times on the third and final day of the issue on Thursday thanks to heavy demand from investors.
The offering of 20.16 million shares was covered nearly 112 times after receiving bids for over 2.25 billion shares, stock-exchange data showed in late afternoon.
It has seen among the highest investor turnout in the last two years. The Rs 600-crore IPO of Amber Enterprises India Ltd, which makes white goods for global players like Whirlpool and Daikin, was subscribed 165 times in January 2018 while Apollo Micro Systems’ Rs 160-crore IPO was covered 248 times the same month.
Mumbai-based construction firm Capacit’e Infraprojects Ltd had previously attracted record demand for its IPO in September 2017 after it was subscribed 183 times.
Securities depository firm CDSL and hypermarket chain Avenue Supermarts had also seen very strong demand for their respective IPOs in 2017. To be sure, CDSL IPO is the most successful offering in India since Gurgaon-based FCS Software’s Rs 17.5 crore IPO in August 2005.
In IRCTC's IPO, the portion of shares reserved for institutional investors was subscribed nearly 109 times, while non-institutional investors — comprising corporate houses and affluent individuals — bid for nearly 355 times the shares reserved for them.
The quota of shares reserved for retail investors was covered nearly 15 times, while shares for employees received 5.8 times demand.
High net-worth individuals (HNIs) typically invest in large quantities on the final day of the issue to save on the interest cost on the short-term capital they borrow to fund their IPO applications.
On the grey market, shares of IRCTC shares were quoting at a premium of Rs 190-200 apiece over the price band of 315-320 per share. This indicates high demand for the company’s shares, said a grey market dealer.
IRCTC, which provides online ticketing service for the world’s fourth-biggest rail network, is seeking Rs 5,120 crore ($721 million) in valuation through the IPO that is entirely a share sale by the government. At the upper end of the price band, IRCTC’s public offering will fetch the government Rs 645 crore ($91 million). The sale is part of the government’s disinvestment programme.
The IPO will bring down the government’s stake to 87.4% from 100% earlier. It will get three years from the listing date to bring its stake down to 75% or below as per the minimum public shareholding norms for listed companies.
The company had filed its draft prospectus last month and received approval from the capital markets regulator on September 17. VCCircle had first reported about IRCTC’s IPO plans and merchant banker appointment in May 2017.
IDBI Capital Markets & Seucities, SBI Capital Markets and Yes Securities (India) are arranging the share sale.
Incorporated in September 1999, IRCTC is the sole catering services provider and online ticketing platform to the Indian Railways. It also sells packaged drinking water at railway stations and on trains, and offers travel packages.
IRCTC is Asia’s busiest and world’s second most active website, with an average 15-18 million people transacting per month for the quarter ended June 2019.