Railways engineering and construction firm Ircon International on September 17 has opened its initial public offering for subscription.
Railways engineering and construction firm Ircon International on September 17 has opened its initial public offering for subscription. The price band of IRCOn international's IPO is of Rs 470-475 per share. The bidding in Ircon's initial share has begun today and will close on September 19.
The public issues will help to unlock the value of such PSUs and bring in greater accountability. The government is targeting to garner Rs 80,000 crore through stake sales in state-owned companies in 2018-19.
In June this year, railway consultancy firm RITES made a successful initial share-sale.
Ircon's initial public offer (IPO) comprises an offer for sale of 9,905,157 equity shares or 10 per cent stake by the government. It has fixed a price band of Rs 470-475 per equity share.
At the higher end of the price band, the shares are estimated to fetch over Rs 470 crore.
At present, the ministry holds about 99.7% of IRCON and through this IPO they plan to divest about 10.5% of their holding taking it down to 89.2%.
50% of the issue is kept for qualified institutional buyers (QIB), while 15% to non-institutional individuals (NII) and remaining 35% to retail investors.
Interestingly, the issue is being offered at a discount of Rs 10 per share to retail investors.
Should you invest?
Mrinalini Chetty, Research Analyst at Centrum told Zee Business, "At the higher end of the price band of Rs 475, the issue is priced at P/E of 10.9x (post dilution) on FY18 basis, which we believe is attractive. The company has no listed peers."
Mrinalini explains that, historically debt free, in FY18 IRCON has acquired debt of ₹3,203 crore from the Indian Railway Finance Corporation (IRFC) @ interest rate of 8.77% (repayable in 5 equal instalments commencing from 15 Apr’19) to pay upfront lease premium to Rail Land Development Authority (RLDA) for the acquisition of a project site.
"Given the government focus on infrastructure spends (initiatives like Metro, Bharatmala, Economic corridors), healthy order book and attractive valuations, we suggest that investors can Subscribe to the issue," says Mrinalini.
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 "IRCON international IPO: All you need to know before subscribing")
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