Issue Date:?20th June ? 22nd June 2018
Price Band(Rs):?180-185 |??Lot Size (No. of Share):?80
Company Background
Incorporated in 1974, RITES Ltd. is a Government of India Enterprise, under the aegis of Indian Railways. RITES Ltd., an ISO 9001:2008 company, is a multi-disciplinary consultancy organization in the fields of transport, infrastructure, and related technologies. It provides a comprehensive array of services under a single roof and believes n transfer of technology to client organizations. In overseas projects, RITES actively pursues and develops cooperative links with local consultants/firms, as means of maximum utilization of local resources and as an effective instrument of sharing its expertise.
Issue Details
| Issue Opens | 20-June-18 |
| Issue Closes | 22-June-18 |
| Issue Size(Rs in Crore) | 466.20 |
| Face value(per equity share) | 10 |
| Price Band(Rs.) | 180-185 |
| Lot Size(No of Share) | 80 |
| No of Shares on Offer(Crore) | 2.52 |
| QIB(%) | 50% |
| Non-Institutional(%) | 15% |
| Retail(%) | 35% |
| Commencement of Trading | 03-July-18 |
Strengths
- Unique Business structure gives them edge over other peers
- Comprehensive range of consultancy services and a diversified sector portfolio in the transport infrastructure.
- Large order book with strong and diversified clientele base across sectors.
- It has experienced management personnel and technically qualified team;
- It has strong and consistent financial performance supported by robust internal control and risk management system.
Concerns
- The business is completely depends upon Ministry of Railways for a significant portion of our business including equipment, technical staff etc.
- The company is dependent on the line of credit provided by the GoI and other funding agencies provided to countries that operate in.
- The company faces certain competitive pressures from the existing competitors and new entrants in both public and private sector.
- The company is subject to inherent risks associated with external suppliers, contractors and sub-contractors being involved in its projects.
Our View
On upper price band of Rs 185 and EPS of Rs17.7, P/E works out to be 10.4x. On last 3 years average EPS of Rs 16.16, P/E works out to be 11.4x. For EPS of latest 9 month ended Dec-2017, P/E works out to be 11.8x. Therefore for the price band of 180-185, P/E would be in the range of 10x to 12x. There are no listed peers who are in similar business for comparison. However, issue price at P/E of 12x can be considered as attractively priced.
RITES is a preferred consultant of Indian Railways along with other government authorities with exposure in international operation. It is a virtually debt free company. Given RITES competence along with good track record, healthy financials and attractive valuations. We recommend our investors to invest in this IPO for medium to long term.
RITES Ltd Allotment Status Online
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