We have been discussing a lot of upcoming IPOs recently. Here we bring for you another eye catching Initial Public Offering: IRCTC Ltd. IPO Review, its listing dates, pricing and subscription other important details.
IRCTC Limited: Company Overview
Incorporated as Indian Railway Catering and Tourism Corporation Limited on September 27, 1999 IRCTC Ltd is a Central Public Sector Enterprise which is wholly owned by the Government of India and is under the administrative control of the Ministry of Railways.
IRCTC Ltd 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. IRCTC Ltd got the status of Mini Ratna (Category-I Public Sector Enterprise) by the Government of India, on May 1, 2008.
And, you know what? www.irctc.co.in is one of the highly used websites in the Asia-Pacific region.
It doesn’t have any financial or strategic partners. It neither has a holding company nor any subsidiaries. IRCTC has a joint venture company namely Royale Indian Rail Tours Limited, with Cox & Kings (India) Limited.
IRCTC Limited: Services Offered
Currently, IRCTC Ltd. operates in 4 business segments:
- Internet Ticketing
- Catering
- Packaged Drinking Water (Rail Neer)
- Travel and Tourism
Let’s gather some more interesting facts on each of these services offered by IRCTC Ltd.
1. Internet Ticketing:
IRCTC Ltd is the only entity authorized by Indian Railways to offer railway tickets online through their website (www.irctc.co.in) and mobile application (Rail Connect). On daily basis, more than 0.80 million tickets are booked through www.irctc.co.in and Rail Connect app.
2. Catering:
IRCTC Ltd provides food catering services to Indian Railway passengers on trains (mobile catering) and at stations (static catering) for approximately 350 pre-paid and post-paid trains and 530 static units. The company also offer e-catering services to passengers through mobile application “Food on Track” and e-catering website, www.ecatering.irctc.co.in.
3. Packaged Drinking Water (Rail Neer):
Have you heard of “Rail Neer”? It’s the brand of IRCTC Ltd. The manufacturing and distributing of packaged drinking water is done under this brand. The are 10 functional plants having a production capacity of 1.09 million liters per day. This is 45% of the current demand of packaged drinking water at railway premises and in trains.
The company has also installed water vending machines (WVMs) at railway stations to provide purified, chilled and portable drinking water to railway passengers at an affordable price.
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4. Travel and Tourism:
IRCTC Ltd. has been mandated by Indian Railways to provide tourism and travel related services. The company has footprints across all major tourism segments such as hotel bookings, rail, land, cruise and air tour packages and air ticket bookings.
IRCTC Ltd.: Key Strengths to Know
- IRCTC Ltd has been profitable and debt free company since incorporation.
- The company has not experienced any instances of time/cost overrun in their business operations.
- No defaults or rescheduling of borrowings with financial institutions in respect of the current borrowings from the lenders.
- Online rail bookings are expected to grow rapidly at 8% CAGR approximately.
Key Risks of IRCTC
- Any adverse change in policy of the Ministry of Railways.
- Failure to upgrade consumer awareness of the company’s brand.
- Declines or disruptions in the travel industry.
- As of March 31, 2019, the contingent liabilities as shown in the financial statements amounted to Rs.166.79 Cr.
Competitive Strengths of IRCTC
- Authorized by the Ministry of Railways to offer tickets of Indian Railways.
- An authorized catering service provider to passengers travelling by Indian Railways.
- Exclusively authorization to manufacture and supply packaged drinking water at various railway station and trains.
- A robust provider of tourism and hospitality services in India.
- Qualified and experienced employees and management team.
- Robust operating system and internal control.
IRCTC Ltd. Team
Promoters
The promoter of IRCTC Ltd. is President of India acting through the Ministry of Railways, Government of India.
Directors
As on date, IRCTC Ltd has has 11 Directors on its Board, which includes two Whole–time Directors, two Part–time Government Directors, six Part–time (Non–official) Directors and a Director with additional charge.
| S.No. | Name | Designation |
|---|---|---|
| 1 | Mahendra Pratap Mall | Chairman and Managing Director |
| 2 | Rajni Hasija | Whole-time Director (Tourism & Marketing) |
| 3 | Narendra | Director (Finance) |
| 4 | Neeraj Sharma | Part–time Government Director |
| 5 | Smita Rawat | Part–time Government Director |
| 6 | Kanak Aggarwal | Part–time (Non–official) Director |
| 7 | Sarita Deshpande | Part-time (Non-official) Director |
| 8 | Rabi Narayan Bohidar | Part–time (Non–official) Director |
| 9 | Dheeraj Sharma | Part–time (Non–official) Director |
| 10 | Comal Ramachandran Sundaramurti | Part-time (Non-official Director) |
| 11 | Sachin Chaturvedi | Part-time (Non-official) Director |
IRCTC Ltd. Financials
As on the date of filing IPO application, IRCTC Ltd. does not have any outstanding or sanctioned fund-based facilities.
However, they have availed certain bank guarantee facilities from Kotak Mahindra Bank Limited and IDBI Bank Limited aggregating to ₹ 86.10 million, in order to be able to meet their contractual obligations towards their clients.
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IRCTC Ltd: Summary of Assets and Liabilities (in Rs. Cr.)
| Particulars | Reference | As on 31.03.2019 | As on 31.03.2018 | As on 31.03.2017 |
|---|---|---|---|---|
| Assets | ||||
| Total non-current asset | 1a | 325.05 | 258.87 | 259.76 |
| Total current assets | 1b | 2,258.72 | 2,060.22 | 1,566.68 |
| Total Assets | 1c=1a+1b | 2,583.78 | 2,319.10 | 1,826.45 |
| Equity | ||||
| Equity share capital | 2a | 160.00 | 40.00 | 40.00 |
| Other equity | 2b | 882.84 | 914.52 | 746.55 |
| Total Equity | 2c=2a+2b | 1,042.84 | 954.52 | 786.55 |
| Liabilities | ||||
| Total non-current liabilities | 3a | 66.69 | 89.63 | 92.18 |
| Total current liabilities | 3b | 1,474.24 | 1,274.94 | 947.70 |
| Total Liabilities | 3c=3a+3b | 1,540.93 | 1,364.58 | 1,039.89 |
| Total Equity and Liabilities | 3d=2e+3c | 2,583.780 | 2,319.10 | 1,826.45 |
IRCTC Ltd: Summary of Profit and Loss (in Rs. Cr.)
| Particulars | Reference | As on 31.03.2019 | As on 31.03.2018 | As on 31.03.2017 |
|---|---|---|---|---|
| Income | ||||
| Revenue from operations | 1a | 1,867.88 | 1,470.46 | 1,535.38 |
| Other Income | 1b | 88.77 | 99.09 | 67.46 |
| Total Revenue(top-line) | 1c=1a+1b | 1,956.66 | 1,569.56 | 1,602.85 |
| Expenses | ||||
| Total Expenses | 2a | 1,526.69 | 1,223.92 | 1,247.78 |
| Profit/ Loss | ||||
| Profit before tax | 3a | 429.96 | 345.63 | 355.06 |
| Tax | 3b | 157.36 | 125.01 | 125.98 |
| Profit After Tax(bottom -line) | 3c=3a-3b | 272.59 | 220.61 | 229.08 |
| Earnings Per Share | ||||
| Basic in Rs.(Face value of Rs.10 each) | 3a | 17.04 | 13.79 | 14.32 |
| Diluted in Rs.(Face value of Rs.10 each) | 3b | 17.04 | 13.79 | 14.32 |
IRCTC Ltd: Summary of Cash Flows (in Rs. Cr.)
| Particulars | Reference | As on 31.03.2019 | As on 31.03.2018 | As on 31.03.2017 |
|---|---|---|---|---|
| Cash Flows | ||||
| Net cash generated from operating activities | 1a | 492.66 | 23.62 | 338.23 |
| Net cash used in investing activities | 1b | -346.35 | 40.2 | 93.56 |
| Net cash used in financing activities | 1c | -179.39 | -56.79 | -135.94 |
| Net Cash | 1d=1a+1b+1c | 460.07 | 493.15 | 486.11 |
IRCTC Ltd: Return on Net Worth
| Year/Period ended | RoNW (%) | Weight |
|---|---|---|
| March 31, 2019 | 26.14 | 3 |
| March 31, 2018 | 23.11 | 2 |
| March 31, 2017 | 29.12 | 1 |
| Weighted Average | 25.63 |
Important Terms:
i. Return on net worth (%) = Restated profit after tax for the year / net worth as at the end of the year
ii. Net worth is the sum of Equity Share capital and other equity. This may include Securities premium, General
reserve, retaining earnings, etc.
iii. Weighted average RoNW: When you divide the aggregate of year-wise weighted RoNW with the aggregate of weights, the result is Weighted Average Return on Net Worth.
RoNW= ((RoNW x Weight) for each year) / (Total of Weights)
IRCTC Ltd: Net Asset Value per Equity Share
The Net Asset Value (NAV) per equity share is Rs.65.18 as on March 31,2019.
Net Asset Value per Share (Rs)= Restated net worth attributable to the equity shareholders at the end of the
period/ year / Number of Equity Shares outstanding at the period/ year.
IRCTC IPO Objective
- Carrying out the disinvestment of equity shares.
- To achieve the benefits of listing the equity shares on the stock exchanges.
IRCTC IPO Offer Size
The Offer will comprise of a Net Offer of 20,000,000 Equity Shares and the Employee Reservation Portion of [●] Equity Shares. The Offer and Net Offer shall constitute [●]% and 12.50% of the post-Offer paid-up Equity Share capital of IRCTC Ltd, respectively.
IRCTC IPO Dates, Price Band & Details:
IRCTC IPO to open for subscription 30th September 2019 and closes on 3rd October 2019 with a price band of Rs.315-320 per share. It is aimed to raise around Rs.645 crore with this fresh IPO issue.
Here are some other useful details on the IRCTC IPO:
| Issue Open Date | 30th Sep'19 to 3rd Oct'19 |
|---|---|
| Issue Price | Rs.315-320 per share |
| Issue Type | Book Built Issue IPO |
| IPO Listing at | NSE & BSE |
| Issue Size | Sale of 2 cr shares by Ministry of Railways. An additional 1.6 lakh shares for employee reservation portion. |
| Face Value | Rs.10 per share |
| Market Lot | 40 shares |
| Minimum Order Quantity | 40 shares |
Note: The retail investors and employees shall get a Rs.10 discount per share to final offer price.
What do you think about this IPO? Is it worth investing in IRCTC Ltd Initial Public Offering? Or should you wait for some other options? Feel free to share your views.