At ‘attractive valuation’, IRCTC IPO oversubscribed 77 times

IPO, IRCTC, Railways, divestment
The IRCTC said that the mentioned paper was found inside the regular approved newspaper as insert. (iStock)

The initial public offer (IPO) for the government-owned IRCTC, which opened for subscriptions on September 30 and closed on Thursday (October 3), was oversubscribed for almost 77 times so far as strong demand was witnessed in the retail investor and non-institutional investors segments.

As part of its divestment strategy, the government is offering two crore equity shares or 12.6% stake through this IPO. After the allocation of the shares post-IPO, the government’s stake will fall to 87.4%.

The strong demand has been attributed to the “attractive valuation” at which IRCTC shares are being offered. Many stock brokerages that cater to the retail segment have given a subscribe recommendation to this IPO.

Also read | IRCTC IPO price band set at ₹315-320, govt intends to raise ₹645 crore


The IRCTC is offering its shares at ₹315-320 per share but retail investors get a discount of ₹10 per share. So, the effective price band of IRCTC IPO for retail investors stands at ₹305-310 per share.

At current prices and IRCTC’s monopoly in providing packaged drinking water, catering, and online ticket booking services to passengers travelling by the Indian Railways, many retail investors find the prospect of investment in this issue as attractive. IRCTC is also venturing as a private train operator as the railways opens key routes to private operators.

However, IRCTC remains exposed to potential risks of any change in policies such as the one witnessed in 2016 when the government asked it to discontinue its ticketing charges during the period of demonetisation.

Also read | Why private players in Indian Railways could be a game changer