The central government-owned RailTel is preparing the pitch to go public; submitted the draft prospectus with SEBI, seeking approval. In its draft red herring prospectus, the firm said that it is planning to float an initial public offer (IPO) to raise approximately Rs 700 crores from the market. After Mazagon Dock, it will be the second public sector unit to list with the bourses this year.
RailTel belongs to the mini-ratna group of companies, provides telecom network and infrastructure, data centre management and hosting, and system integration services to government and non-government firms.
Incorporated in 2000, Railtel is the largest neutral telecom company that created to modernize the existing telecom system for train control. The company is involved in the mission to create a network for nationwide broadband and multimedia services and own PAN- India optic fibre with exclusive Right of Way along railway tracks.
The company is involved in several significant government projects for building optic fibre network across the nation, offering wi-fi connectivity to railway stations, optical fibre-based connectivity in northeast India, and responsible for rolling out of National Knowledge Network (NKN).
Important Details From The Draft Prospectus
RailTel’s draft prospectus with the SEBI contains the key highlights.
- RailTel IPO files draft RHP of Rs 700 crores with SEBI
- RailTel IPO will contain offer-for-sale scrips as the government is trying to offload 8,66,53,369 shares from its stash and employee reserve
- RailTel is a profit-making PSU unit, wholly owned by the central government of India
- The company turned profitable in 2007
- Since 2013, RailTel is running on internal accruals and is net debt-free as per the DRHP
- The draft papers filed with SEBI shows that the company registered a revenue growth at 7.47 percent CAGR during FY 2018-20
- As of June 2020, the company owns a fibre-network covering 55,000 km and 5,677 railway stations; offering free public wi-fi connectivity at 985 railway stations
- RailTel appointed ICICI Securities, IDBI Capital, and SBI Capital Markets Ltd. as Book Running Lead Managers (BRLMs) to manage RailTel IPO
With the IPO market revival, we can hope to see more big names to drop in. Oversubscription of Mazagon Dock is a clear indication that there is a demand for profit-making government companies’ IPOs. RailTel too like Mazagon Dock belongs to the mini-ratna category with a revenue growth clocking at 7.47 per cent CAGR. RailTel has done considerably well during the last financial year. According to the company’s draft prospectus, it managed a profit margin of 30 percent as against 33 and 40 percent of close competitors Vodafone and Reliance JIO.
There is no confirmation yet on the RailTel IPO date. We will soon post as it is announced.