Rail Vikas Nigam Debuts In Stock Market At 2% Discount To Issue Price

Rail Vikas Nigam Ltd. started trading at Rs 18.65 per share, a 1.8 percent discount to its issue price on the Bombay Stock Exchange. The stock is poised to recover its opening losses as it moves higher to trade at Rs 19.35 apiece.

The state-run company, which builds infrastructure for high speed rail, is the third company from the railway’s stable to be listed on the stock exchanges as its promoter, the Government of India, aims to offload a part of its stake. This is the first Central Public Sector Enterprise disinvestment in the current fiscal.

Rail Vikas Nigam’s initial public offering—a four-day maiden offer that opened on March 29—received bids from both retail and institutional investors, fetching the government about Rs 480 crore from the sale of 12.12 percent of its stake.

Retail investors subscribed about 2.5 times the shares reserved for them, while qualified institutional buyers portion subscribed 1.36 times. The total issued size was of 25,34,57,280 shares and the price band for the initial public offer was Rs 17-19 apiece.

About The Company

Rail Vikas Nigam is in the business of executing all types of railway projects, including new lines, doubling, gauge conversion, railway electrification, metro projects, workshops, major bridges, construction of cable-stayed bridges and institution buildings, among others.

Incorporated by the Ministry of Railways, the Miniratna company so far has been awarded 174 projects, of which it has completed 72. The remaining 102 projects are worth Rs 77,504 crore as of Dec. 31, 2018, providing revenue visibility for 10 years.

The company, so far, generated most of its revenue by laying new lines and doubling tracks on existing routes, according to its red herring prospectus. New and double-track railway lines constitute most of the orders of the company.

The company’s net worth was nearly Rs 3,925 crore as on Sept. 30, 2018. That translates into a book value of Rs 19 apiece.