IRCTC Offer For Sale (OFS)

[Stuti Dubey]

Hello All,
I am not a trader but an investor. I don't have time & expertise for being a full time trader who make (I hear) 5 to 10% per month irrespective of whether markets are up or down. Like every field, markets are a vast domain of knowledge & the "movers & shakers" are never at loss & the naive are never making gains.

I had invested into IRCTC during IPO. And then disposed off at handsome gains on listing. Then it went going up and reached 2000 odd in FEB. Then it turned out to be most severely hit stock due lockdown and fell below 1000. And now it is stuck at 1300 levels since few months. The excellent FY20 results made no impact. The bad Q1FY21 results had no impact. The generally accepted view is, the rise of IRCTC is more or less linked with opening of trains and travelling of public.

In between all this, the Govt is coming up with an OFS to sell 15 to 20% stake in IRCTC. There is lot of news & speculations & what not around it. Some call it a negative news and some others, positive. Some claim a lower circuit, some claim upper circuit. As always, the naive will become the sacrificial lamb and the insiders will make a killing.

Some are comparing it with the recent HAL OFS.

I searched over the internet and found the following.

In case of HAL OFS:

Invitation of bids from Merchant Bankers & Selling Brokers happened BEFORE lockdown (21st Feb 2020).

Appointment of MB/SB happened DURING Lockdown (7th May 2020). During this period of 2.5 months, entire stock market went down & HAL too went down from 750 to 500.

After appointment of the MB/SB, HAL went up from 500 to 1300 (2.6 times in 3 months from 7th May 2020 to 13th Aug 2020).

Then OFS came on 27th Aug 2020 at 1000 and stock has fell to 850 since then.

if IRCTC follows the EXACT SAME PATTERN: Last date of bids for MB/SB was 14th Sept 2020. Appointment of MB/SB/etc may happen in Dec 2020. The CMP already discounts the severe hit due to lockdown. OFS may be open during March 2020. Before OFS, IRCTC should reach 3500 (2.6 times of CMP). Then OFS may be announced at 20% discount (2800). After OFS, IRCTC may settle at 10% below OFS price (2500)

Any effect of more & more trains opening (or other developments) will be extra.

Please share expert knowledge for benefit of all.

 

[travi]

Hello All,
I am not a trader but an investor. I don't have time & expertise for being a full time trader who make (I hear) 5 to 10% per month irrespective of whether markets are up or down. Like every field, markets are a vast domain of knowledge & the "movers & shakers" are never at loss & the naive are never making gains.

I had invested into IRCTC during IPO. And then disposed off at handsome gains on listing. Then it went going up and reached 2000 odd in FEB. Then it turned out to be most severely hit stock due lockdown and fell below 1000. And now it is stuck at 1300 levels since few months. The excellent FY20 results made no impact. The bad Q1FY21 results had no impact. The generally accepted view is, the rise of IRCTC is more or less linked with opening of trains and travelling of public.

In between all this, the Govt is coming up with an OFS to sell 15 to 20% stake in IRCTC. There is lot of news & speculations & what not around it. Some call it a negative news and some others, positive. Some claim a lower circuit, some claim upper circuit. As always, the naive will become the sacrificial lamb and the insiders will make a killing.

Some are comparing it with the recent HAL OFS.

I searched over the internet and found the following.

In case of HAL OFS:

Invitation of bids from Merchant Bankers & Selling Brokers happened BEFORE lockdown (21st Feb 2020).

Appointment of MB/SB happened DURING Lockdown (7th May 2020). During this period of 2.5 months, entire stock market went down & HAL too went down from 750 to 500.

After appointment of the MB/SB, HAL went up from 500 to 1300 (2.6 times in 3 months from 7th May 2020 to 13th Aug 2020).

Then OFS came on 27th Aug 2020 at 1000 and stock has fell to 850 since then.

if IRCTC follows the EXACT SAME PATTERN: Last date of bids for MB/SB was 14th Sept 2020. Appointment of MB/SB/etc may happen in Dec 2020. The CMP already discounts the severe hit due to lockdown. OFS may be open during March 2020. Before OFS, IRCTC should reach 3500 (2.6 times of CMP). Then OFS may be announced at 20% discount (2800). After OFS, IRCTC may settle at 10% below OFS price (2500)

Any effect of more & more trains opening (or other developments) will be extra.

Please share expert knowledge for benefit of all.

IRCTC can't be compared with any other entity. It monopolizes ticket sales which is major revenue.
Operational profit or more commonly the loss is the Railway Ministry/Govt problem.
Entities are not willing to get into privatization bcos its so big they can't figure how to manage it.
It's a mammoth task to get many companies to buy zones and take it over. What I mean to say, is it will take more than a decade if it ever happens.

Till then, is business as usual.
So irctc is a good bet, and railways will get operational in months to come. Vaccine or no vaccine, it can't be lockdown or restricted life for longer than a year.

 

[Stuti Dubey]

IRCTC can't be compared with any other entity. It monopolizes ticket sales which is major revenue.
Operational profit or more commonly the loss is the Railway Ministry/Govt problem.
Entities are not willing to get into privatization bcos its so big they can't figure how to manage it.
It's a mammoth task to get many companies to buy zones and take it over. What I mean to say, is it will take more than a decade if it ever happens.

Till then, is business as usual.
So irctc is a good bet, and railways will get operational in months to come. Vaccine or no vaccine, it can't be lockdown or restricted life for longer than a year.

IRCTC is a participant bidder in the recent tender of private trains. So, in this case, privatisation does not mean Govt (IRCTC) loosing those trains. It means more premium trains like Tejas under IRCTC which is a major source of revenue for it.

Other than ticketing, tourism & catering was a major source of revenue.

But all those big numbers & uniqueness has bitten dust in the lockdown.

Now the talk is OFS.

When it will come? What will be the price? How much will be subscrition? And how will the price move between now and the OFS?

Lot of "experts" on the internet but hardly any useful insights into it. For comparison, I checked HAL.

 

[Stuti Dubey]

Bharat Dynamics OFS
Last date for bidding by MB/SB::13th Feb 2020::275
Appointment of MB/SB::11th May 2020::229
PEAK::14th Aug 2020::455
OFS date::9th Sep 2020::314
CMP::18th Sep 2020::319

 

[Stuti Dubey]

Indian Railways has received 120 bids from 15 bidders in response to the RFQ to run 151 passenger trains on 140 pairs of routes divided into 12 clusters.

The 15 bidders are IRCTC, BHEL, GMR, IRCTC, IRB, L&T, Arvind Aviation, Construcciones y Auxiliar de Ferrocarrriles S.A, Cube Highways & Infrastructure III Pvt Ltd, Gateway Rail freight Limited, Malempati Power Private Limited, Megha Engineering & Infrastructures Limited, PNC Infratech Ltd, RK Associates & Hoteliers Pvt Ltd, Sainath Sales & Services Pvt Ltd and Welspun Enterprises Limited

Cluster-wise bids received were: 9 for Mumbai#1, 2 for Mumbai#2, 10 for Delhi#1, 12 for Delhi#2, 11 for Bengaluru , 9 each for Chandigarh, Howrah, Chennai & Patna, 10 each for for Prayagraj, Secunderabad & Jaipur.

No news about OFS yet, expect that it may come "this week". Experts & insiders may educate & elucidate.