Indian Railway Catering and Tourism Corporation (IRCTC) saw huge demand for its shares in the initial public offering (IPO) which closed on Thursday. IRCTC's IPO to raise Rs 645 crore was subscribed close to 112 times by the end of the bidding process on Thursday, data compiled by the National Stock Exchange showed.
Investors bid for over 225 crore shares of the company, compared with 2.02 crore shares on the offer, according to data from the National Stock Exchange, as of 6:00 pm on Thursday. As per the data on NSE, IRCTC received bids worth Rs 72,000 crore at the upper price band.
IRCTC is authorised by the railway ministry to sell Indian railway tickets online, offer catering service and manufacture and supply packaged drinking water at railway stations and on trains across India.
IRCTC operates in four business segments and also offers e-catering services to passengers via its mobile phone application.
"IRCTC could see better valuation and a jump in EPS from second half of FY20 due to restoration of service charges which were halted after demonetization and the recently announced corporate tax rate-cut," Deepak Jasani, head of retail research at HDFC Securities told Reuters.
"It is also partly in the internet space and such companies are witnessing heightened investor interest."
The IPO is part of the government's divestment process to help meet its target to raise Rs 80,000 crore this fiscal year. In January, sources told Reuters that the government plans to meet this target through the sale of state-owned assets.
The government will hold a 87.4 per cent stake in IRCTC after the IPO.
Earlier this year, government-run Rail Vikas Nigam Ltd and MSTC Ltd failed to garner as much attention as IRCTC, but were fully subscribed at the end of the subscription period.
The issue for IRCTC, which also handles holiday packages and pilgrimage tours for the Indian railways, comprises an offer for sale of 2.02 crore shares in a price band of Rs 315-320 per share.
IRCTC will not receive any proceeds from the offer and all proceeds will go to the government, according to the red herring prospectus.
The overwhelming response comes amid slowing growth in Asia's third-largest economy, which has hit sales of everything from cars to cookies, prompting the government to step in with deep cuts in corporate taxes and a raft of other measures to revive growth.