Illustration: Ajay Mohanty
State-owned transport infrastructure company Ircon International’s initial public offering (IPO) was subscribed at 27 per cent on Monday — the first day of the issue. Most of the bids, so far, have come from retail investors, with the portion allotted to them witnessing 86 per cent subscription. The price band for the issue is Rs 470 to Rs 475 per share. Retail investors applying in the IPO will be offered a discount of Rs 10 per share. Most retail-focused brokers have advised their clients to subscribe to the IPO.
“At the IPO price band of Rs 470-475, the stock is available at 10.7-10.9 times 2017-18 earnings. Adjusting for subsidiary investments worth
Rs 7 billion, the issue is available at 9.2 times 2017-18 earnings on higher band, which is attractive valuation vis-à-vis its peer companies,” says a note by ICICI Securities.
Following the IPO, the government's stake in the company will decline from 99.7 per cent to 89.2 per cent.
Ircon's IPO is the second by a government-owned entity this financial year. In June, the Centre had raised Rs 4.6 billion through the IPO of Rites, a firm that operates in transport consultancy and engineering sector. Ircon's IPO will close on Wednesday.