RITES IPO sails through; fully subscribed on Day 2

The initial public offering (IPO) of railways consultancy firm RITES sailed through on the second day of bidding today. The issue got oversubscribed 118 per cent by the noon trade. The share sale to raise about Rs 466 crore received bids for 2,30,19,840 shares as against total issue size of 2,52,00,000 shares, data available on National Stock Exchange showed at 1:30 pm. 

The category set aside for qualified institutional buyers (QIBs) was subscribed 2 per cent, non-institutional investors 19 per cent and retail investors 1.64 times.

The price band for the issue has been fixed at Rs 180-185 per share.

RITES is the first state-owned firm to hit the IPO market in the current fiscal year. The IPO will close on June 22.

Elara Capital (India), IDBI Capital Markets & Securities, IDFC Bank and SBI Capital Markets are managing the issue.

Experts believe one may subscribe to RITES IPO not only for listing gains but also for long-term hefty returns. 

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"At the upper band of the issue price, the stock trades at 12x (annualized FY18 EPS) which seems to be reasonable, given the stable business model, strong order book, increasing revenue opportunities from Railways due to new investments in electrification and infrastructure and healthy RoE of 17-18%. RITES also has cash of ~Rs 15 billion on the balance sheet. We recommend “Subscribe”," said brokerage Prabhudas Lilladher in a research note.