1
Please refer to important disclosures at the end of this report
1
1
Largest Neutral Telecom Infrastructure Provider
RailTel is an information and communications technology (“ICT”) infrastructure
provider and are one of the largest neutral telecom infrastructure providers in
India. Company 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.
Positives: (a) Company is amongst the largest neutral telecom infrastructure
providers in India with pan-India optic fiber network (b) Company has a diversified
portfolio of services and solutions (c) Key partner to the Indian Railways in digital
transformation (d) Experience in executing projects of national importance with a
robust pipeline of projects (e) Professionally managed with strong corporate
governance and senior management team with significant industry experience.
Investment concerns: (a) The telecommunications industry in India is highly
regulated and changes in laws, regulations or governmental policy could
potentially adversely affect the business, prospects, financial condition, cash flows
and results of operations (b) Company is dependent on and derive a substantial
portion of their revenue from PSU customers, the Indian Railways and other GoI
entities as well as State Governments (c) Not updated with technological changes.
Outlook & Valuation: Company is going to play a key role in digital transformation
of Indian Railways. Company’s margins & return ratios are better compared to
other telecom players in India. Company also has a strong financial position (debt
free) and has been consistently paying dividends since 2008. There are no listed
peers for the Company. Company has priced its issue at 21.4x PE on a FY20
trailing basis, which is quite reasonable by looking at the strong future growth rates
of the Company. We expect a good listing for the Company. We are positive on the
long term prospects of the industry as well the Company, we recommend
"SUBSCRIBE" to the RailTel IPO for long term as well as for listing gains.
Y/E March (` cr)
FY18
FY19
FY20
Net Sales
976.8
1,003.3
1,128.1
% chg
-
2.7
12.4
Net Profit
134.0
135.4
141.1
% chg
-
1.0
4.2
EBITDA (%)
27.0
30.1
29.6
EPS (Rs)
4.2
4.2
4.4
P/E (x)
22.5
22.3
21.4
P/BV (x)
2.5
2.3
2.2
ROE (%)
10.9
10.5
10.3
ROCE (%)
12.1
15.4
15.3
EV/EBITDA
9.4
8.2
7.1
EV/Sales
2.5
2.5
2.1
SUBSCRIBE
Issue Open: February 16, 2021
Issue Close: February 18, 2021
Offer for Sale: 8.7 cr share
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters 72.8%
Others 27.2%
Fresh issue: NIL
Face Value: Rs 10
Present Eq. Paid up Capital: Rs 320.9 cr
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: Rs 320.9 cr
Issue size (amount): Rs 819.2 cr
Price Band: Rs 93-94
Lot Size: 155 shares and in multiple thereafter
Post-issue implied mkt. cap: *Rs 2,985 cr - **Rs 3,017 cr
Promoters holding Pre-Issue: 100.0%
Promoters holding Post-Issue: 72.8%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Keshav Lahoti
+022 39357600, Extn: 6363
keshav.laho[email protected]elbroking.com
RailTel Corporation of India Ltd
f
IPO Note | Telecom
February 14, 2021
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RailTel Corporation of India Ltd | IPO Note
February 14, 2021
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Company background
Company were incorporated on September 26, 2000 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
January 31, 2021, the optical fiber network covers 59,098 route kilometers and
covers 5,929 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.
Issue details
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
320,938,407
100.0
233,785,038
72.8
Public
0
0.0
87,153,369
27.2
Total
320,938,407
100.0
320,938,407
100.0
Objectives of the Offer
To carry out the disinvestment of 87,153,369 Equity Shares by the Selling
Shareholder.
To achieve the benefits of listing the Equity Shares on the Stock Exchanges.
Key Management Personnel
Puneet Chawla, aged 57 years, is the Chairman and Managing Director of the
Company since December 14, 2018. He is an IRSSE officer (batch of 1985). Prior
to joining the Company, he has held positions such as Executive Director (Safety) in
the Railway Board of Ministry of Railways, Government of India, Divisional Railway
Manager, Ajmer, Chief Project Manager, Indian Railway Project Management Unit,
General Manager, Rail Vikas Nigam Limited. He holds a bachelor’s degree in
B.E/Electronic and Electrical Communication from Punjab Engineering College,
Chandigarh and a Master’s degree in Business Administration from Indira Gandhi
National Open University.
Sanjai Kumar, aged 52 years, is the Director (Network, Planning and Marketing) /
Whole time Director of the Company. He holds a bachelors degree of technology
in electronic and telecommunication engineering from University of Allahabad and
a post graduate diploma in management from Management Development
Institute, Gurgaon.
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RailTel Corporation of India Ltd | IPO Note
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Y/E March (` cr)
FY18
FY19
FY20
H1FY21
Total operating income
976.8
1,003.3
1,128.1
537.4
% chg
-
2.7
12.4
Total Expenditure
712.7
701.1
794.2
407.3
Access and other Charges
250.1
263.5
249.0
149.1
License fee and spectrum charges
47.3
46.0
47.9
26.4
Expenses on Project
253.3
249.4
340.1
110.8
Employee Benefits Expenses
118.0
112.0
120.5
66.9
Administrative & Other Expenses
43.2
27.1
31.5
50.4
Corporate Social Responsibility
0.8
3.0
5.2
3.9
EBITDA
264.1
302.2
333.8
130.1
% chg
-
14.4
10.5
(% of Net Sales)
27.0
30.1
29.6
24.2
Depreciation& Amortisation
118.6
111.6
130.9
81.7
EBIT
145.5
190.6
202.9
48.3
% chg
-
31.0
6.5
(% of Net Sales)
14.9
19.0
18.0
9.0
Interest & other Charges
3.8
7.9
6.8
2.5
Other Income
44.4
35.0
38.0
16.4
(% of Sales)
4.5
3.5
3.4
3.0
Recurring PBT
186.1
217.7
234.1
62.2
% chg
-
17.0
7.5
Exceptional item
-26.5
-
-49.3
-
Tax
25.6
82.3
43.7
16.6
PAT (reported)
134.0
135.4
141.1
45.6
% chg
-
1.0
4.2
(% of Net Sales)
13.7
13.5
12.5
8.5
Basic & Fully Diluted EPS (Rs)
4.2
4.2
4.4
1.4
% chg
-
1.0
4.2
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Y/E March (` cr)
FY18
FY19
FY20
H1FY21
SOURCES OF FUNDS
Equity Share Capital
320.9
320.9
320.9
320.9
Other equity
908.2
968.1
1,048.4
1,073.7
Shareholders Funds
1,229.2
1,289.1
1,369.4
1,394.6
Other liabilities
352.6
147.0
163.5
179.8
Total Liabilities
1,581.8
1,436.1
1,532.8
1,574.4
APPLICATION OF FUNDS
Property, Plant and Equipment’s
684.3
786.0
608.5
581.7
Capital Work-in-Progress
364.2
299.9
252.5
231.5
Right of Use Assets
-
-
173.0
167.5
Intangible Assets
3.6
4.0
7.8
14.7
Current Assets
1,164.1
1,102.7
1,115.5
1,388.7
Inventories
-
0.9
0.5
0.2
Trade Receivables
466.7
459.6
507.1
656.5
Cash and Cash Equivalents
72.8
71.6
134.5
74.5
Other Bank Balances
436.4
335.3
133.9
294.5
Other Assets
188.2
235.4
339.6
363.1
Current liabilities
741.1
791.5
865.3
907.7
Net Current Assets
423.0
311.2
250.3
481.0
Other Non Current Asset
106.6
35.1
240.7
98.0
Total Assets
1,581.8
1,436.1
1,532.8
1,574.4
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Y/E March (` cr)
FY18
FY19
FY20
H1FY21
Profit after Tax
134.0
135.4
141.1
45.6
Depreciation
118.6
111.6
180.2
81.7
Change in Working Capital
(128.7)
(126.3)
(94.1)
(89.1)
Interest Expense
-
5.3
3.4
1.4
Direct Tax Paid
(50.5)
(61.4)
(38.3)
(38.0)
Others
(32.6)
(29.1)
(19.0)
19.2
Cash Flow from Operations
40.9
35.4
173.3
20.8
(Inc.)/ Dec. in Fixed Assets
(117.2)
(83.8)
(61.7)
(34.5)
Interest income
40.3
27.8
27.8
9.2
Others
78.4
96.6
(14.0)
(30.4)
Cash Flow from Investing
1.5
40.6
(48.0)
(55.7)
Dividend paid
(62.0)
(75.3)
(55.8)
(20.0)
Payment for Lease Liability
-
(1.9)
(6.7)
(5.1)
Cash Flow from Financing
(62.0)
(77.2)
(62.5)
(25.1)
Inc./(Dec.) in Cash
(19.6)
(1.2)
62.9
(60.1)
Opening Cash balances
92.4
72.8
71.6
134.5
Closing Cash balances
72.8
71.6
134.5
74.5
Y/E March
FY18
FY19
FY20
Valuation Ratio (x)
P/E (on FDEPS)
22.5
22.3
21.4
P/CEPS
13.2
11.3
11.7
P/BV
2.5
2.3
2.2
EV/Sales
2.5
2.5
2.1
EV/EBITDA
9.4
8.2
7.1
Per Share Data (Rs)
EPS (Basic)
4.2
4.2
4.4
EPS (fully diluted)
4.2
4.2
4.4
Cash EPS
7.1
8.3
8.1
Book Value
38.3
40.2
42.7
Returns (%)
ROE
10.9
10.5
10.3
ROCE
12.1
15.4
15.3
Angel ROIC (Pre tax)
42.0
34.1
24.7
Turnover ratios (x)
Receivables (days)
174.4
167.2
164.1
Payables (days)
101.3
97.1
122.6
Working capital cycle (days)
73.1
70.1
41.5
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RailTel Corporation of India Ltd | IPO Note
February 14, 2021
6
Research Team Tel: 022 - 39357800 E-mail: r[email protected]angelbroking.com Website: www.angelbroking.com
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