Mumbai: RailTel, the state owned miniratna, has filed a Draft Red Herring prospectus with market regulator SEBI.
ICICI Securities, IDBI Capital, SBI Capital Markets Ltd are merchant bankers to the issue.
The IPO arrives after a cabinet approval for stake dilution of up to 25 percent as of December 2018.
RailTel, according to reports, is expected to raise Rs 700 crores from the IPO. This by way of making available 8.66 crore worth of shares.
At present, RailTel Corporation aims to modernise the existing telecom system for train control, operations, and safety besides creating a nationwide broadband and multimedia network by laying optical fiber cable along the railway tracks.
For those keen on understanding the IPO or for subscribing, here are three important things:
1. Nature of Business of RailTel:
Incorporated in the year 2000, RailTel prides itself as having one of the biggest neutral telecom infrastructure in the country. RailTel's optical fibre network that lies along the railway track gives it an exclusive Right of Way (RoW).
According to RailTel's DRHP, the fibre network spans 55,000 kms touching 5,677 railway stations.
RailTel is "The" company offering free public Wi-Fi service at Indian railway stations. So far, RailTel offers free wi-fi at 985 railway stations.
RailTel handles communication system, video conferencing and implementation of e-office platform and also stores important data for Indian Railways at its data centres in Gurgaon and Secunderabad.
2. Revenues of RailTel:
The PSU holds a debt-free status and for past seven years is operating on funds driven by internal accruals.
For the year March 31, 2020, the company has reported Rs 184.76 crore in profit before taxes, as per DRHP. Meanwhile, profit after tax stood at Rs 141.06 crore.
Among notable mentions, it was selected for working on National Knowledge Network (NKN), Bharat Net and optical fibre-based connectivity project in northeast India.
3. Peer Comparison of RailTel:
According to the DRHP, RailTel has posted a balanced operational profitability for 2019-20. The margin of 30 percent was between Vodafone Idea and (33 per cent) and Reliance Jio Infocomm (40 per cent).
The icing is better RoCE or return on capital employed of 14 percent. RJio has a RoCE of 13 percent for the same comparison period.
The company's net worth has been positive since incorporation and is consistently growing, according to its own assessment.
During FY18-20, revenue from operations saw a compounded-annual-growth of 7.47 percent.
For investors, the great pointer on dividends is answered as "we have been giving dividends since Fiscal 2008," it added.