RailTel Corporation of India Limited

Started in 2000, RailTel Corporation of India Limited is an information and communications technology ('ICT') infrastructure provider and is one of the largest neutral telecom infrastructure providers in India. This is a Mini Ratna (Category-I) Central Public Sector Enterprise, wholly-owned by the Government of India and under the administrative control of the Ministry of Railways. The company 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 June 30, 2020, company's optic fiber network covers over 55,000 route kilometers and covers 5,677 railway stations across towns and cities in India. The transport network is built on high capacity dense wavelength division multiplexing ('DWDM') technology and an Internet protocol / multi-protocol label switching ('MPLS') network over it to support mission critical communication requirements of Indian Railways and other customers. Company operates data centers in Gurugram, Haryana and Secunderabad, Telangana to host and collocate critical applications for customers including the Indian Railways. In addition to strategic and critical network infrastructure services, they also undertake various ICT projects for the Indian Railways, central government and state governments, including various train control system projects for Indian Railways. Company offers a diverse range of services across industries. The portfolio of services can be broadly classified as below: As per financial performance, RailTel has posted total income/net profits of Rs. 1021.22 cr. / Rs. 131.91 cr. (FY18), Rs. 1038.27 cr. / Rs. 135.22 cr. (FY19) and Rs 1166.01 cr / Rs 136.07 cr (FY20). For upto H1 of FY21, company has posted profit of Rs 45.27 Cr on total revenue of Rs 553.78 Cr. So company has shown good performance. RailTel has posted an average EPS of Rs. 4.30 and average RoNW of 10.47% for last three fiscals. Issue is priced at a P/BV of 1.25 as per NAV of 43.45 on 30.09.20. As per FY20 earnings, P/E is around 28. If we attribute latest annualised earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 42. As per RHP, there are no listed peers in the market.  On BRLM's front, three BRLMs are associated with this IPO, and have handled around 17 IPOs in last three fiscals, and from last 10 IPOs, 4 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 1 is trading below issue price and remaining above issue price. ( As on 11.02.2021 ) As per financials, results are very good, RoNW is 10.47% for last three fiscals and issue looks fully priced with respect to current earnings. With expansion of Railway in India, RailTel will also grow and servicing other organisations will provide more opportunities in Company's growth. Performance of BRLMs are good. So we give SUBSCRIBE rating to this IPO and one may invest from long term perspective also with regular dividend income.

• 1 THE PRESIDENT OF INDIA, ACTING THROUGH THE MINISTRY OF RAILWAYS, GOVERNMENT OF INDIA