The Indian Railway Catering and Tourism Corp Limited (IRCTC) that sells tickets for the Indian Railways and manages its catering services plans to launch its IPO on 30th September that is, from the outset of Navratri season.
Take on going public
The company’s plan to launch its initial public offering comes immediately after a sharp turnaround in the Indian stock markets, following finance minister Nirmala Sitharaman’s announcement the previous week to slash down corporate taxes. The benchmark Sensex has gained 8% since Friday. Many firms had seen IPO approvals lapse in the last couple of months due to levity in stock markets on account of slowing economic growth, global trade war, and rising crude prices.
A person aware of the talks said that the IRCTC’s proposed IPO is expected to see the center sell stake worth Rs 480 crore through an offer for sale. The price band is scheduled to be announced on Wednesday.
According to reports, the government is looking to offload up to 2 crore shares in IRCTC via IPO to raise between Rs 500- 600 crore. The government will be reducing its stake in the company by 12.5% by making the stake sale.
The business side of IRCTC
IRCTC’s business is divided into four sections, namely, internet ticketing, catering, packaged drinking water under the ‘Rail Neer’ brand, and travel & tourism. According to its draft prospectus filed with the regulators in August, the company’s sales rose 25% year-on-year to Rs 1,899 crore; its profits grew 23.5% to Rs 272.5 crore in FY’19.
IRCTC witnesses the highest traffic on its website in the Asia-pacific region, with a 25 million transaction volume per month, and up to 7.2 million logins per day. Around 800,000 tickets are booked each day via the IRCTC website and Rail Connect.
However, catering has emerged as the company’s most significant contributor to sales over the years. Catering business alone contributes to more than half of the revenue at Rs 1,044 crore as of FY’19. Internet ticketing contributes to around 12%, while the remaining Rs 444 crore comes from tourism & travel related services and Rs 176 crore from its Rail Neer packaged drinking water business.