IRFC IPO: Key details you should know before investing

IRFC IPO: Key details you should know before investing

The 4,633 crore Indian Railway Finance Corporation (IRFC) IPO saw a strong response on the first day after it opened for subscription on January 18. The maiden issue of the non-banking financial company was subscribed 64.7 per cent on the first day of the bidding. The IRFC IPO will close on January 20.

The public issue offer received bids for 80.89 crore shares against an IPO size of over 124.75 crore equity shares, according to bidding data available on the stock exchanges. Ahead of the IPO, IRFC said that it has received a good response from anchor investors, who helped raise approximately Rs 1,390 crore of its total issue size of Rs 4,633 crore.

Demand for the public issue remained strong among retail investors as well. Retail investors subscribed the issue 1.25 times on day one of the IPO, while the portion reserved for employees subscribed over 13.5 times. Meanwhile, the portion reserved for non-institutional investors saw a subscription of over 9 per cent.

Here are key details about the IRFC IPO:

1) The IRFC IPO is the first public offering of the calendar year and is the first by an NBFC in the public sector. The IRFC public issue consists of 1,78,20,69,000 equity shares, which includes a fresh issue of 118.8 crore shares. It also includes an offer for sale of 59.4 crore shares by the central government. It may be noted that the offering also includes a reservation of Rs 50 lakh worth of shares for eligible employees.

2) IRFC, which is the wholly-owned of the Government of India (GoI), is planning to raise roughly Rs 4,600 through the IRFC IPO and its shareholding in the NBFC will come down to 86.4 per cent from 100 per cent after the issue.

3) The IRFC is issuing shares at a price band of Rs 25-26 and the lot size is 575. Interested investors can place bids for a minimum of 575 shares at a price of Rs 14,950 at Rs 26 per share.

4) With the IPO coming to a close on January 20, brokerages are hoping that the IRFC share allotment is likely to be finalised on January 25 and it could be listed on January 29. The share allocation and refund will be managed by KFin Technologies Private Limited, which is the registrar of the IRFC IPO.

5) The lead book running managers of the issue are DAM Capital Advisors, HSBC Securities and Capital Markets (India), ICICI Securities and SBI Capital Markets.

6) Given its gradual revenue and profit expansion over the last two years, the company has a low-risk profile. It may be noted that for the year ended March 2020, IRFC had posted a net profit of Rs 3,192 crore. IRFC is exempted by RBI from asset classification norms and its gross NPAs are nil.

7) Brokerages and analysts have also asked investors to see this IPO as a long-term investment opportunity. Subscribing this issue over a prolonged period may reap more benefits in comparison to the listing gain of approximately 10-15 per cent.

8) IRFC is the funding arm of the Indian Railways and its primary business is financing the acquisition of rolling stock assets and project assets of the Indian Railways and other entities under the national transporter. The company has played a vital role in supporting projects and expansion of the Indian Railways.

Source: www.indiatoday.in

 

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