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    IRFC IPO subscribed 1.22 times on Day 2

    Synopsis

    By 5:00 pm on Tuesday, the issue received bids for 152.64 crore shares, which was 122.35 per cent of the issue size of 124.75 crore shares. The issue was subscribed 65 per cent on the first day.

    Agencies
    IRFC is the dedicated market borrowing arm of the Indian Railways.
    NEW DELHI: The Rs 4,633-crore IPO of Indian Railway Finance Corporation (IRFC) got fully subscribed on the second day of the bidding process led by strong demand from retail investors.

    By 5:00 pm on Tuesday, the issue received bids for 152.64 crore shares, which was 122.35 per cent of the issue size of 124.75 crore shares. The issue was subscribed 65 per cent on the first day.

    Shares under the IPO, comprising a fresh issue of up to 1,188,046,000 shares and an offer for sale (OFS) of 594,023,000 shares, are being sold in the price band of Rs 25-26 apiece. IRFC has already raised Rs 1,398.63 crore from 31 anchor investors. The issue will close for subscription on January 20.

    While 35 per cent of the issue is reserved for retail investors, the quota for qualified institutional bidders (QIBs) is fixed at 50 per cent, and 15 per cent for non-individual investors.

    The issue so far has seen a strong response from retail investors whose allotted portion has been subscribed 230 per cent by the end of the second day. However, the response from high net-worth individuals and qualified institutional buyers has remained muted so far.

    Analysts said that the asking valuation at a price to book value (P/BV) of one time looks attractive for long-term conservative investors, considering the company’s strong profitability growth of 26.3 per cent during FY18-FY20, its double-digit return on equity (RoE) of 12.2 per cent in FY21, and the low risk profile of the business with zero gross non-performing assets (NPAs). But they are advising investors to consider the issue only for long-term gains.

    Astha Jain of Hem Securities said that while valuations look reasonable and she likes the low risk, strong asset liability management and the cost-plus-business model of the company, she sees limited expansion on the margin and RoE fronts.

    “Looking at the strong business profile of the company, but with limited growth aspects, we give Subscribe rating for long term. That said, we are not expecting any major negative movement for the stock after listing,” Jain said.

    Anand Rathi finds the IPO valuation attractive. The brokerage said the company enjoys high credit worthiness, but is highly dependent on Indian Railways' capex plans.

    "The government has undertaken various policy interventions in order to liberalise the Railways including development of freight corridors, high speed railway and elevated corridors. It has also permitted 100 per cent FDI on automatic routes in a large number of railway infrastructure areas. Considering capex visibility, we recommend a "subscribe" rating to this IPO with a long-term view," it added.
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    2 Comments on this Story

    Samba Sivam41 days ago
    When this IRFC will be listed in the market please.
    Sincerely, -Sambasivam.D
    Explorer43 days ago
    this just shows how much faith markets have in Govt. run companies.
    just don't understand the fact that how topline highly educated people fail the companies. almost all of the govt companies.
    it just sounds like gold egg laying hen are butchered and then sold for the price of meat.
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