Threat to BSNL, tepid listing gains: Analysts’ take on RailTel IPO

RailTel Corporation of India’s three-day IPO, which opened on February 16, has already been subscribed 1.5 times on the very first day. The retail investors seem strongly supportive to the issue as their reserved portion has subscribed 2.25 times, while that of employees was subscribed by about 16 per cent. The portion set aside for non-institutional investors has been subscribed by 23 per cent. Qualified institutional buyers, so far, have not started putting their bids yet.

What seems to be working for the company is the fact that RailTel is a ‘MiniRatna’ that provides information and communications technology (ICT) infrastructure to the Indian Railways. Financially, RailTel has been profitable since FY 2007 and has been paying dividends since FY 2008. Its operations have been funded entirely by internal accruals since 2013 and is a debt-free company.