After an overwhelming demand for its IPO, the Indian Railway Catering and Tourism Corporation (IRCTC), government’s railway catering and ticketing arm has debuted on the stock markets with a stellar listing on the Bombay Stock Exchange. IRCTC listed at Rs 651, a premium of 103% from the issue price of Rs 320.
This is reportedly the best listing a company stock has seen since 2017.
As of 10 15am, it was trading at Rs 673.20 per share, which is 110.38% higher.
The Rs 645-crore public issue was subscribed 112 times when it was opened for subscription between September to October 3. It received Rs 72,000 crore worth of bids.
As part of the IPO, the government is selling 2 crore shares, which amounts to 12.6% of its stake in the company.
The IRCTC is the ticketing, catering and tourism arm of the Indian Railways. It is the fourth entity of the Indian Railways to be hitting the stock markets after RITES, Rail Vikas Nigam and IRCON International.
IRCTC has a near monopoly when it comes to selling railway tickets online. It is also the only company that is authorised to provide catering services, packaged drinking water for trains in India at railway stations, and also provide online ticketing service for railway tickets.
Online ticket sales, catering, sale of packaged drinking water and tourism are its four business segments, with catering contributing the most (52.9%) to its business. This is followed by tourism, which brings in 23.5% of the business, online ticket sales which contribute 12.4% to its revenue. Sales of Rail Neer, its packaged drinking water brand brings in 11.1% of the revenue.
In fiscal year 2019-20, the company posted a net profit of Rs 272 crore, which is a growth of 9% over the past two fiscals. Its revenues grew from Rs 1,470 crore in FY18 to Rs 1,867 in FY19. And the company operates at a profit margin of nearly 14%.
As per reports, the revenue from its catering services has more than doubled from Rs 400 crore to over Rs 1000 crore in two years.
The company also re-introduced service charge on tickets since September 2019. This is a Rs 15 charge for lower class and Rs 30 for AC class per ticket.
This has the potential to bring in an additional income of nearly Rs 600 crore for the company. This is because the company sells approximately 2.5 crore tickets per month or 30 crore tickets annually, and at an average of Rs 20 service charge per ticket, the amount comes up to Rs 600 crore annually.