RailTel IPO envisages to raise Rs. ₹819 crore entirely though an Offer for sale of f up to 87 million shares and shall open from February 16 to February 18. RailTel IPO would be the seventh IPO this year and second by the Ministry of Railways after IRFC IPO. The company has set the price band for the issue at ₹93 -94 per share. The government is to sell a 27.16% stake in the company. RailTel Corporation of India Ltd. (RailTel), a miniratna fully owned by the central government that provides telecom & data services.

Related Posts: Railtel IPO: Consolidated Brokerage Views

RailTel Details

Issue PeriodTue 16th Feb – 18 Feb 2021
Issue DetailsOffer for Sale of upto 87,153,369 Equity Shares
Issue Size (₹ Cr)₹ 811 Cr – ₹ 819 Cr
Price Band₹ 93 – 94
Bid Lot155 Shares
Issue Structure : 
QIB50% of the net offer 
NIB15% of the net offer
Retail35% of net offer ( ~ 30,328,680 Shares- ₹ 285 Cr)
Application needed for 1x Retail1,95,668
BRLMsICICI Securities, IDBI Capital, SBI Capital Market
RegistrarKFin Technologies Pvt. Ltd.


  • ANCHOR ISSUE: Railtel allotted 2.6 crore shares to Anchor investors at Rs 94 each. Some key Anchor Investors include HDFC Life, Nippon Life India, Goldman Sachs India among others.

About RailTel Corporation of India

  • RailTel is a Mini Ratna (Category-I) central public sector enterprise.
  • It is an an information and communications technology (ICT) infrastructure provider and is one of the largest neutral telecom infrastructure providers in India.
  • Railtel was incorporated with the aim of modernizing the existing telecom system for train control, operation and safety and to generate additional revenues by creating nationwide broadband and multimedia network by laying optical fiber cable by using the right of way along railway tracks.
  • As of 31st Jan. 2021, it had an exclusive right of way along 67,415 route kilometers connecting 7,321 railway stations for layingOFC. The company has 59,098 route kilometers of OFC network connecting 5,929 railway stations across towns and cities in India. It also has city wide access network of over 18,000 kilometers and offers high capacity bandwidth of up to 800G at 87 locations in India. The company also offers leased line and VPN facilities and also provide IP-1 services likely to commence in FY21.
  • Services provided by RailTel can be broadly classified as:
    • Telecom Network Services National Long Distance Services;
    • Internet Service Provider (“ISP”) Services;
    • Telecom Infrastructure Services.
    • Managed Data Center and Hosting Services.
    • Projects or System Integration Services.
  • Company’s operations are certified with various certifications including ISO 9001:2015, ISO/IEC 20000-1:2011, ISO/IEC 27001:2013, CMMI Maturity Level-3 and CMMI Maturity Level-4 for their quality management systems, information security management systems, and service management systems, respectively.
Image result for railtel image

RailTel: Financials

Particulars/Rs. In Cr. H1Fy21Fy20Fy19Fy18
Revenue from Operations537.41,128.051,003.27976.78
EBITDA 146.44322.46337.15282.05
EBITDA Margin (%)27.25%28.59%33.61%28.88%
Profit Before Tax62.18184.76217.69159.61
Net Profit45.58141.07135.36134.01
Net Profit Margin8.48%12.51%13.49%13.72%
EPS (₹)1.424.44.224.18
Equity Share Capital320.94320.94320.94320.94
Net worth1,394.631,369.361,289.091,229.18
RoNW (%)3.27%10.30%10.50%10.90%
Net Asset Value (₹)43.4542.6740.1738.3
Dividend (%)21.00%20.00%19.46%
EPS  FY204.40
IPO Price94
PE 21.39
P/ BV2.16
Market Cap3017
Market Cap  /  Sales3.0


  • Among the largest neutral telecom infrastructure providers in India with pan-India optic fiber network.
  • Key partner to the Indian Railways in digital transformation.
  • Experience in executing projects of national importance with a robust pipeline of projects.
  • Strong track record of financial performance.
  • Professionally managed with strong corporate governance and senior management team with significant industry experience.


  • The company is dependent on and derives a substantial portion of our revenue from PSU customers, the Indian Railways, and other GoI entities as well as State Governments.
  • Lower spending from the central and state governments
  • May face difficulty in monetizing assets
  • Railtel could face competition from the private operators

RailTel: Assessment

  • Railtel has a strategic relationship with the Indian Railways.
  • It undertakes a wide variety of projects including provision of mission critical connectivity services such as Video Surveillance System (“VSS”) at stations, within the trains, e-Office’ services and implementing short haul connectivity between stations and long haul connectivity to support various organizations within the Indian Railways.
  • RailTels’ business from Indian Railways increased by 54.4% CAGR over FY18-20.
  • Indian railways contributed 25.1% to the total revenue in FY20.
  • With significant growth plans by Indian railways, there can be good opportunities for RailTel.
  • Currently, the company leads the pack of the telecom industry with 13% profit margins and 14% ROCE. Management is confident for slow and steady growth.
  • RailTel is profitable since FY07 and paid dividend since FY08. Average dividend payout stood at around 40% over FY18-20.Networth is positive and consistently growing since incorporation. The company is net debt free and is funding its operations through internal accruals since FY13.
  • EPS when calculated after excluding EO and relevant tax, for FY2020 stood at R 5.6 and the annualized EPS for FY21 is Rs 2.8. At the price of Rs. 94, this discounts the FY20 and annualized FY21 EPS by about 17x and 33x respectively. Other railway infrastructure companies are trading at an average P/E of 10x. However fundamentals appear mildly positive for the company.
  • I may apply in RailTel IPO based on reasonable subscription from QIB category. . The RailTel looks just OK but cannot be counted to deliver listing gains in view of its PSU tag. .

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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