Railways protest over under-pricing of IRCTC IPO

Indian Railways is miffed over the pricing of IRCTC IPO that saw an overwhelming response and was listed at 101 per cent premium.

The national transporter 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, reported TOI.

IRCTC shares, which were issued at Rs 320, listed at Rs 644 on the BSE and closed at Rs 729 on Monday, valuing the company at nearly Rs 11,700 crore. In terms of over-subscription, the railway PSU's offer was the most successful issue by a state-run company.

The government, on the other hand, raised Rs 645 crore for a 12.6 per cent stake that it sold, which valued the company at over Rs 5,000 crore, raising questions over the valuation undertaken by the merchant bankers. IDBI Capital Markets, SBI Capital Markets and Yes Securities managed the issue.

On Thursday, the stock was trading at Rs 708, up 1 per cent from the previous close.

The first proposal to list the PSU — which is largely into ticketing and also entered the business of running trains recently — came around two years ago, but railway minister Piyush Goyal opposed the plan as the company was valued at just around Rs 2,500 crore.

The proposal came months after the demonetisation exercise when IRCTC had stopped collecting a fee on ticket bookings, pulling down its overall revenue.