Railtel To Sell Shares At Rs 93-94 Apiece In IPO

Railtel Corporation of India Ltd. will sell shares at Rs 93-94 apiece in its initial public offer that will make the state-run firm the second company under the Indian Railways to go public this year.

Railtel, a Miniratna fully owned by the central government that provides telecom and data services to the public and private sectors, plans to launch its Rs 819-crore IPO on Feb. 16, according to a company statement.

The IPO, however, won’t help the government get anywhere close to its divestment target of Rs 2.10 lakh crore for the ongoing financial year ending March. According to the Department of Investment and Public Asset Management, the government has raised only Rs 19,499 crore so far in FY21 from asset sales in public sector firms. The target for the next fiscal is Rs 1.75 lakh crore.

Railtel’s maiden offer follows Indian Railway Finance Corp Ltd. that listed on exchanges in January. And Railtel will be the sixth railway company to go public. Others include IRCON International Ltd., RITES Ltd., Rail Vikas Nigam Ltd. and Indian Railway Catering and Tourism Corp.

Railtel’s offer will comprise of 8.71 crore shares of face value Rs 10 each, including 5 lakh shares reserved for its employees. The IPO is offer for sale of shares by President of India acting through the Ministry of Railways. Post issue, 27.19% of stake will be held by public shareholders.

Railtel provides information and communications technology infrastructure. It operates an optic fibre network covering over 59,098 route kilometres and 5,929 railway stations in India. It has the exclusive right of way along 67,415 kilometres connecting 7,321 railway stations. It provides Wi-Fi services at railway stations with 16 million unique users a day and 30.01 million average user logins a month.

While the government and central public sector units are its major customers, it also caters to private sector. “We have 35% of the revenue coming from the private sector,” said Puneet Chawla, chairman and managing director at Railtel, in an interaction with BloombergQuint.

“We have bid for high-speed broadband connectivity of gram panchayats in two states,” said Chawla. “In Jharkhand, we have proposed to initiate viability gap funding till the project doesn't achieve breakeven.”

It has over 3 lakh retail broadband subscribers as it provides infrastructure for hospitals and polyclinics of the Indian Railways. “We have over 18,000 route kilometres of city-based fibre optics network,” said Chawla, adding that while public sector enterprises will be the largest revenue contributor, retail customers and private sector will also show significant growth.

The company generated a revenue of Rs 1,166 core for the year ending March 2020 and net profit of Rs 141 crore.

Watch the interview wit Railtel Chairman Puneet Chawla: