Fundamental Analysis of RailTel IPO Share Price

The fundamental analysis based on the data described in RHP is summarized as follows –

Note: I suggest that you must read both these posts related to fundamental analysis- 1. Fundamental analysis of stocks and 2. How to analyze the balance sheet of a company.

As usual, start fundamental analysis of RailTel company at three levels.

1. At the level of whole economy – India’s economy is on its way to recovery.

2. At the level of industry – There are no listed peers for comparison with the company. However you can use telecom companies to compare.

3. At the level of specific company – The RailTel has been successfully made a mark in Indian Railways with its innovative and quality services.

The company operates its business through four diversified services. Which are –

1. Telecom Network Services -The company generates a maximum of 52% of revenue through this service. Under this services, the company provides internet leased lines, VPNs, ISP services to Indian Railways and other PSUs.

2. Telecom Infra Services – This is the third major source generates 12% of total revenue. Under this services, the company provides space for towers, servers and network equipment and optical fiber to several operators on lease.

3. Managed Data Centre & Hosting Services – The company generates the lowest 3% revenue through this service. Under this, cloud computing, hosting services, managed e-office services etc. are provided.

4. Projects – It is the second major source generating 34% of total revenue. The company also undertakes projects related to special purpose projects like digital transformation, hardware & software projects etc. for a lot of PSUs.

Characteristics of RailTel IPO

The list of features of RailTel IPO is-

  • The company has diversified services.
  • The company is profitable telecom player and totally debt-free company.
  • The company has a monopoly in the Indian Railways, as it has exclusive rights of way (ROW) over the railway tracks having length of 67,415 Km.
  • The company has access to 305,746 retail customers.
  • The company has a sound optic fibre network covering 59,098 Km route and Wi-Fi services at 5,929 railway stations in India.
  • The management of the company has extensive execution experience of ICT projects.

Shortcomings of RailTel IPO

Some of the risks associated with the company are as follows:

  • The company’s business is heavily focused on PSUs.
  • The company is more dependent on the policies of the government.

Opportunities for the RailTel IPO

There are many opportunities for RailTel in the future:

  • The roll out of 5G has started in India. In such a situation, optical fiber based companies can be expected to benefit more.
  • Government of India is more focused on digitalization. RailTel can benefit from campaigns like ‘Digital India’, ‘Bharat Net’.
  • The construction of the “High Speed Mobile Corridor” is the company’s ambitious project.

Financial Performance of RailTel IPO Share Price

(in Rs. million) For the year/period ended (for investors)(for investors)
PARTICULARSH1 2021FY2020FY2019FY2018H1 2021 Yearly ProjectionFY2020(YoY) Performance
Total Assets24,821.502398122,2 76.7523,228.796.54% positive10.30% positive
Total Revenue5,537.8411,660.0510,382.6610,212.18-5.01% negative12.30% positive
Profit After Tax455.841,410.661,353.561,340.06-35.37% negative4.22% positive
  • Total assets increased from 23,228 million to 24,821 million in three and a half years, showing a steady growth.
  • Revenue increased slowly (YoY) but decreased in H1 2021. This was due to the effect of COVID-19.
  • There was also a steady increase in PAT but there was negative data in H1FY21.

Financial Ratios and Elements of RailTel IPO Share Price

Financial Ratio or ElementValueRemark
Scrip code and symbols NSE:BSE:
RailTel share price   
52-WEEK HIGH     
52-WEEK LOW   
Latest Dividend (%)   
Latest Dividend Date    
Dividend Yield (%)    
Promoter holding   
 Market Cap (Rs cr)  
Face Value (Rs)    10 
EPS – (TTM) (Rs)     
P/E Ratio (x)    33.10* 
Industry P/E  39 
P/B Ratio (x) 2.16 
Profit Growth    
ROE            
EV/EBITDA               
PEG Ratio   

Intrinsic Value of RailTel IPO Share Price

You can calculate the intrinsic value of Nureca IPO share price with the help of Benjamin Graham’s Formula

Intrinsic Value = [EPS x ( 8.5 + 2g) x 4.4]/Y

Insufficient data. (will update later)

RailTel IPO Share Price Target and Forecast

The stock calculator enables you to achieve some future goals to make your investment easier. (will update after IPO listing)

 Target1Target2Target3Target4
above  – UPTREND Targets    
below – DOWNTREND Targets    

Conclusion

The company’s financial position has been consistently good. Also the company has many opportunities to grow in future.

The company’s IPO can be expected to have a 25-30% listing gain. Not necessarily the same listing-gain as the IPO of Burger King, Mrs Bectors or Indigo Paints.

In the long run, you can expect a constant income from the company.

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