Railways protests against IRCTC public offer price

NEW DELHI: Investors may be rejoicing Indian Railway Catering and Tourism Corporation's (IRCTC's) blockbuster listing, but the railways is not happy with the pricing of the public sector e-commerce company's valuation.
The national transporter has lodged a protest about the price at which shares were offered to investors and has sought better due diligence for future transactions, given the long pipeline of public offers of state-run companies.
IRCTC shares, which were offered at Rs 310 to retail investors and its employees, and at Rs 320 to other investors during the book-building process, listed at Rs 644 on the BSE and closed at Rs 729 on Monday, valuing the company at nearly Rs 11,700 crore.
On Wednesday, the stock closed at a shade above Rs 700, with the market cap pegged at Rs 11,210 crore. In terms of over-subscription, the railway PSU offer was the most successful issue by a state-run company.
In contrast, the government raised Rs 645 crore for a 12.6% stake that it sold, which valued the company at over Rs 5,000 crore, raising a question marks over the valuation undertaken by the merchant bankers. IDBI Capital Markets, SBI Capital Markets and Yes Securities managed the issue.

The PSU - which is largely into ticketing and also entered the business of running trains recently - was proposed to be listed around two years ago, but railways minister Piyush Goyal opposed the plan as the company was valued at around Rs 2,500 crore. It came months after the demonetisation exercise when IRCTC had stopped collecting a fee on ticket bookings, pulling down its overall revenue.
When the bankers came with the plan two years later, the valuation had doubled, but railways was still unwilling to list the company, arguing that the valuation could be higher. But with the department of investment and public asset management (Dipam) pushing the issue to meet the record disinvestment target of Rs 1.05 lakh crore, railways opted to go with the listing.
The railway's concern can have an implication on other public offers as well as other disinvestment proposals.