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After a blockbuster first-day show, can IRCTC revive the moribund primary market for equities, is the question on everyone’s lips. More than 30 months after the bumper listing of Avenue Supermarts, the company that runs retail chain D’Mart, the IPO of Indian Railways Catering and Tourism (IRCTC) made a debut with over 100 per cent gains. The share price of the company more than doubled to touch a high of ₹743 compared to the issue price of ₹320. The stock closed at ₹728.60 on the BSE.
IRCTC’s IPO was oversubscribed 112 times compared to Avenue Supermart’s 106 times. But there is a belief in the market that high price-to-earnings (PE) multiple of the company post listing may subdue any further interest in the stock. Traders say that even though the company has a monopoly in ticketing service and catering, it may not have the pricing power.
“The IPO was a trader’s delight. One will have to see how far the price sustains, as at some point, the reality of price-to-earnings (PE) multiple catches up,” said Deven Choksey, founder promoter, KR Choksey Investment Managers. Experts say that most investors bought into the IPO for flipping gains, and now that the price has doubled, there could be a rush to exit.
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