The initial public offering (IPO) of RailTel Corporation of India has been subscribed 1.23 times so far on Tuesday (February 16), the first day of bidding. The issue has received bids for 7.51 crore equity shares against the offer size of over 6.11 crore shares, as per data available on the exchanges until 12:50 pm.

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The strong subscription was led by retail investors as their reserved portion was subscribed 2.37 times, and that of employees over 17 percent. The portion set aside for non-institutional investors has been subscribed 23 percent, while qualified institutional buyers have not started putting their bids yet.

The price band for the IPO has been fixed at Rs 93-94 per share and the issue will close on February 18.

The offer size is excluding the anchor book as the company had already raised Rs 244 crore from anchor investors on Monday, at the higher end of the price band of Rs 93-94 per share.

The offer will give Rs 819.24 crore to the government but the company will not get any money from this offer.

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RailTel Corporation of India IPO opens today: Key things to know

The information and communications technology infrastructure provider would be the sixth initial public offerings this year.

Most brokerages have advised subscribing to the issue on the back of robust fundamentals, better margins, diversified portfolio, and expectations of strong growth in the future.

Analysts believe that the company is going to play a key role in the digital transformation of Indian Railways. The government's aggressive expansion plan with respect to building railway infrastructure over the next 5 years will further be a key positive.

Read here: RailTel IPO subscription opens today: Here's what brokerages have to say

In FY20, RailTel had the highest net profit margin among key telecom companies and key IT/ICT companies in India, with a profit margin of 12.5 percent. The company expects strong growth in data center services in the future as the government plans to invest in smart cities, health, e-office projects, and education.

“At the upper price band of Rs 94, RailTel is available at a P/E of 21.4x on an FY20 basis, which appears fully priced. Considering, increasing data usage, GoI’s digital India initiatives and further diversification plans of RailTel, we assign a Subscribe rating for the issue,” said Geojit Financial Services.

First Published:Feb 16, 2021 1:46 PM IST