By 12:45 pm on Wednesday, the issue received bids for 1,93,87,69,475 shares, which was 1.55 times the issue size of 1,24,75,05,993 shares. The issue was subscribed 1.22 times by the end of the second day of bidding, and 65 per cent at the end of the first day.
Shares under the IPO, which comprises a fresh issue of up to 1,188,046,000 shares and an offer for sale (OFS) of 594,023,000 shares, are being sold in the price band of Rs 25-26. IRFC has already raised Rs 1,398.63 crore from 31 anchor investors. The issue will close for subscription on January 20.
While 35 per cent of the total issue size is reserved for retail investors, the quotas for qualified institutional bidders (QIBs) and non-individual investors are fixed at 50 per cent and 15 per cent, respectively.
Analysts said that the asking valuation at a price to book value (P/BV) of one time looks attractive for long-term, conservative investors, considering the company’s strong profitability growth of 26.3 per cent during FY18-FY20, its double-digit return on equity (RoE) of 12.2 per cent in FY21 and the low risk profile of the business with zero gross non-performing assets (NPAs). But they are advising investors to consider the issue only for long-term gains.
Astha Jain of Hem Securities said that while the valuations look reasonable and she likes the low risk, strong asset liability management and the cost-plus-business model of the company, she sees limited expansion on the margin and RoE fronts.
“Looking at the strong business profile of the company, but with limited growth aspects, we give Subscribe rating for long term. That said, we are not expecting any major negative movement for the stock after listing,” Jain said.
Anand Rathi finds the IPO valuation attractive. The brokerage said the company enjoys high credit worthiness, but is highly dependent on Indian Railways’ capex plans.
“The government has undertaken various policy interventions in order to liberalise the Railways including development of freight corridors, high speed railway and elevated corridors. It has also permitted 100 per cent FDI on automatic routes in a large number of railway infrastructure areas. Considering capex visibility, we recommend a ‘subscribe’ rating to this IPO with a long-term view,” it added.