RITES IPO subscribed over 66 times by closing day
23 June 2018
The initial public offer (IPO) of public sector Rail India Technical and Economic Services Ltd (RITES), which was fully subscribed on Thursday, was subscribed 66.71 times as of 5 pm on Friday, the closing date of the issue
With its price band fixed at Rs180-185 per share and in lot size of 80 shares and in multiples thereof, the issue was found to be attractive to investors.
RITES is the first state-owned firm to hit the IPO market in the current fiscal.
Elara Capital (India), IDBI Capital Markets & Securities, IDFC Bank and SBI Capital Markets are managing the issue.
Many brokerages had come out with “subscribe” rating to the RITES issue, citing attractive valuation. At the higher end of the price band of Rs185, the issue is priced at P/E of 10.5x (post dilution) on FY17 and 11.4x on 9MFY18 (annualised) basis, which we believe is attractive,” Centrum Wealth Research said in a note.
“As of FY18, RITES order book stood at Rs4,820 crore, 3.9 times order book to sales; thus providing strong revenue visibility. It is well diversified with consultancy services contributing 53 per cent, followed by turnkey projects (29 per cent), exports (15 per cent) and leasing services (3 per cent),” brokerage Motilal Oswal said.
In the RITES IPO, the government is selling a 12-per cent stake or 25.2 million equity shares, including 1.2 million shares to employees. The government hopes to mop up around Rs460 crore from the RITES issue.
“Over FY13-17, RITES registered revenue and PAT CAGR of 9 per cent and 11 per cent, respectively. Average EBITDA margins and RoE over the period stood at 28 per cent and 18 per cent, respectively. RITES is a virtually debt free company,” brokerage Centrum Wealth Research said in a report.
“For the first nine months of FY18 revenue and PAT stood at Rs936 crore and Rs243 crore, respectively. RITES has been consistently paying dividends to shareholders,” Centrum added.
The government is also planning to list two of its railway PSUs - RVNL and IRFC - in the July-September quarter, PTI quoting a senior official said.