IRCON International IPO opens, think before you subscribe

Shares valued at a P/E multiple of 10.9x to its restated FY18 EPS of Rs 43.8


Public sector enterprise IRCON International has opened its initial public offering for subscription on September 17 with a price band of Rs 470-475 per share.


The public issue, which will close on September 19, comprises an offer for sale of 99,05,157 equity shares by the government of India which intends to raise around Rs 470 crore through this IPO. Retail investors and eligible employees will get shares at a discount of Rs 10 per share on the final offer price.

This would be the 9th company coming out with public issue in current financial year 2018-19 while it would be the second company from the government coming out with IPO under divestment programme.

IRCON International, a 99.7 percent government-owned company (under the Ministry of Railways), is an integrated Indian engineering and construction company, specialising in major infrastructure projects, including, railways, highways, development of industrial areas and other infrastructure activities.

With strong order book (Rs 22,406.8 crore as of March 2018), excellent execution track record, healthy financials, virtually debt-free operations, enough cash to meet working capital needs and reasonable valuations, all brokerage houses said one can subscribe the issue for listing gains as well as with long-term perspective.

There are no comparable listed companies in India that engage in the same line of business as the company. At the higher price band of Rs 475 per share, IRCON’s share is valued at a P/E multiple of 10.9x (to its restated FY18 EPS of Rs 43.8), which shows the issue is attractively priced at current levels, brokerages said.

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