Railtel Corporation IPO opens on Feb 16^th, 2021 as the government plans to sell 27.2% stake in the company. The company was incorporated in the Sep-2000 to modernize existing telecom system for train control, operation and safety.

This mini-Ratna, wholly-owned company of Government of India, provides information and communications technology-related services. Another objective is to generate revenues by creating a nationwide broadband and multimedia network by laying optical fiber cable. As of Jan 31, 2021 the optical fiber network covered 59,098 kilometers and covered 5,929 railway stations across length & breadth of India.

Railtel offers the below services:

1. Telecom network services
2. Telecom infrastructure services
3. Managed data center and hosting services
4. Projects, like system integration services

Promoter

President of India, acting through Ministry of Railways, Government of India.

Key strengths

1. One of the largest neutral telecom infrastructure provider
2. Owns a pan-India optic fibre network
3. Diversified product portfolio and strong revenue growth across all offerings
4. A key partner to Indian Railways in their digital transformation journey. Constantly increasing rail network and digitization possibilities in railways is a huge opportunity
5. Strong pipeline of projects and two-decade-long experience in executing nationwide projects

Amount in Rs Cr excluding per share data

1. Growing revenues with a healthy margin
2. Debt-free company

Offer proceeds

 Objects of the offer:

1. Carry out divestment of shares by the owning shareholder
2. Achieve the benefits of listing the equity shares on stock exchanges
3. Railtel will not receive any funds, and all proceeds shall go to selling shareholder

Further, the company expects that listing of equity shares will enhance the visibility and brand image. The listing will also provide a public market for equity shares in India.

IPO Factsheet

Conclusion thoughts

• One of the largest neutral telecom infrastructure provider in India
• Wide range of products across telecom and technology space
• Decent revenue growth and stable margins
• Operates in a highly regulated telecom sector and competes against the much larger operators
• Opportunities of expanding services outside of India; currently bidding to participate in a digital literacy project in primary schools in Kenya, Africa
• Continuously develop innovative digital solutions and deploying the latest technologies can be challenging

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The information provided in the red herring prospectus filed by the company with the Securities and Exchange Board of India (www.sebi.gov.in) is the basis for this note. However, I recommend that the reader validate the data before making any financial decision. Also, investment in an initial public offering (IPO) is subject to market risks. It should be evaluated, keeping your risk profile and investment objective in mind. The author will not be responsible for any financial loss or otherwise resulting from any action taken based on the above.

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