RailTel IPO to open on Tuesday: Here’s what top brokerages recommend

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The initial public offer (IPO) of RailTel, one of the largest neutral telecom infrastructure providers, is set to open for subscription on February 16.

The proposed issue comprises an offer for sale of 8,71,53,369 shares by the President of India, acting through the Ministry of Railways, Government of India, aggregating to a sum of Rs 819 crore. RailTel has fixed a price band of Rs 93-94 for the IPO and investors can bid for a minimum lot of 155 shares and in multiples thereof.

Here’s how different brokerages rated the issue:

Hem Securities: Subscribe The company is bringing the issue at price-to-earnings (P/E) multiple of around 21x at the higher end of price band on FY20 PAT basis. Company’s valuation looks fully priced. However, India lowest fixed broadband subscription per 100 people will give a boost to the company’s performance going forward considering the robust outlook of the industry. Also, the edge which the company holds over its peers in terms of financial performance makes this issue attractive to deploy the funds in. Hence, the brokerage recommends investor to subscribe to the issue for short and long term.

Angel Broking: Subscribe RailTel is going to play a key role in the digital transformation of Indian Railways. Company’s margins and return ratios are better compared to other telecom players in India. It also has a strong financial position (debt-free) and has been consistently paying dividends since 2008. There are no listed peers for the company. Angel Broking expects a good listing for the company. The brokerage is positive on the long term prospects of the industry as well as the company.

Marwadi Shares and Finance: Subscribe RailTel is one of the largest neutral telecom infrastructure providers in India with pan India optic fiber network with sustainable revenue and profit growth. Considering, all these aspects the brokerage sees good future prospects in this company. Considering FY20 adjusted EPS of 4.4, the upper price band implies a P/E ratio of 21.36 times. However, seeing the future prospects of ICT (information and communications technology) and sustainable financial numbers of the company we give subscribe rating to this IPO.