RailTel IPO opens today; Anil Singhvi decodes the issue for investors, from expected listing gains to growth and more

Zee Business Managing Editor Anil Singhvi said that Investors should invest in RailTel IPO. Investors who want to apply for long term can apply and investors can also apply for small listing gains, the Market Guru added. Singhvi cautioned investors not to expect money to be doubled or tripled on RailTel IPO post-listing. He said not to expect strong returns from RailTel IPO listing itself. He said 20 to 25% listing gains possible on RailTel IPO. 

In RailTel IPO, the company has fixed the price band at Rs. 93-94 per share. Singhvi said it is expected to list Rs 15 to Rs 20 above the issue price. Investors who think 20% – 25% is enough, must apply for RailTel IPO. 

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RailTel is managed by the Government of India, it is into the business of Railways. They are into making the infrastructure for Information Technology (IT) and Telecommunications companies from the public and private sector.

RailTel IPO: Positives

Growth Prospects of RailTel are extremely strong. The company will continue securing more orders in this field. There are not many companies who do similar kinds of work.
RailTel is a debt free company and they have cash on their books. This includes the advance that they take from their clients.

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RailTel IPO: Negatives

Don’t expect Supernormal returns from RailTel IPO.

RailTel will not generate extraordinary growth, it will generate reasonable growth. RailTel IPO investors should expect 12 to 15% return in this company, which is not less, says Singhvi.
Investors should hold RailTel stock in their portfolio if they think 15% growth in the company is enough for them. They should not expect 20% to 25% compounded growth every year.
12% to 15% in a Government company who is into the business of Telecommunications and Infrastructure is decent according to Singhvi. Valuations of RailTel are reasonable, it is not available at cheap valuations. Anil Singhvi said Investors should apply for RailTel IPO.

RailTel is into 4 to 5 business verticals. Some Business verticals should be compared with BSNL/ MTNL/ Bharti Airtel/ Reliance Jio while some verticals should be compared to Sterlite Technologies/ Finolex Cables. Some other RailTel verticals need to be compared with Tata Communications. The business of RailTel is very well diversified. RailTel will do extremely well if going forward it enters into the private sector.