IRCTC files DRHP for IPO, eyes to raise around Rs 600 Cr

Government-owned entity Indian Railway Catering and Tourism Corp. Ltd (IRCTC) is raising capital through an Initial Public Offering (IPO) and has filed draft red herring prospectus(DRHP) with the Security Exchange Board of India (SEBI) on Thursday.

Indian Railways' ticketing and catering handler is looking to raise around Rs 600 crore by issuing around two crore shares. The shares will be listed on both Bombay Stock Exchange(BSE) and National Stock Exchange(NSE) with a face value of Rs 10 as per IPO papers filed by IRCTC.

The DRHP papers listed IDBI Capital Markets & Securities, SBI Capital Markets and YES Securities (India) as managers to offer. Only 35% of the shares will be available for allocation to individual retail bidders with up to 50% of the offer allocated for qualified institutional bidders and the rest 15% set aside for non-institutional bidders on a proportional basis.

This move is part of the planned disinvestment process Finance Minister Nirmala Sitharaman had announced in her budget speech in July. She said that the government has set a target of Rs 1,05,000 crore as income from disinvestment in public enterprises for the year.

As per the data provided by the Department of Investment and Public Asset Management, the Union government has already collected Rs 12,357.49 crore from disinvestment so far in this financial year.

As per the disinvestment plan, the government is looking to raise around Rs 1.05 trillion this fiscal year through strategic disinvestments and the listing of profitable CPSEs.

The DRHP filed by IRCTC lists it as the only entity authorised by Indian Railways to provide online railway tickets, catering services to the railways and packaged drinking water in trains and at railway stations across India.

The central public sector enterprise, which is under the administration of Railway Ministry and is owned by the government business is divided into four segments — internet ticketing, catering, packaged drinking water under the ‘Rail Neer’ brand, and travel and tourism.

As roughly  23 million people travel in Indian railways daily, the IRCTC website gets the most online traffic in the Asia-Pacific region, with almost 800,000 tickets booked daily and an average of 25 million transactions per month.

IRCTC was incorporated by the government in 1999 and was awarded the Miniratna (Category-I Public Sector Enterprise) status on May 1, 2008.

IRCTC recorded Rs 1,899 crore in turnover in the last fiscal year with a year of year growth of around 25% and almost 55% of the sales coming from its catering business, totalling around Rs 1,044 crore. Its profits also grew by 23.5% to 272.5 crore in FY19.