8 Solid reasons why you should subscribe Rail Vikas IPO for the long term.

Rail Vikas Nigam Ltd. is the third company from the railway’s stable to launch an initial public offering as it aims to raise close to Rs 477 crore by selling 12.% stake at Rs 17–19 apiece through the four-day maiden offer that opens on March 29.

Business: 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.

Here are 8 solid reasons why you must go for it

Strong Revenue & NI Growth:

The company reported 33.7% annual growth in revenues during FY15–18. Profit rose 19.1% compounded annually during this period.

2. Risk-Free debt:

The company has a total debt of Rs 2,843 crore, mostly from Indian Railway Finance Corporation — the financing arm of Indian Railways. However, the risk related to this loan is nil as the Railway Ministry takes full responsibility for debt servicing, which only passes through Rail Vikas Nigam’s books.

3. Huge Dividend:

The company has also been consistently paying dividends to shareholders over the last five years.

4. One direct listed peer:

Rail Vikas Nigam will have only one direct listed peer — Ircon International Ltd. Over the last four financial years, Rail Vikas Nigam has been growing at a faster pace than its peer as Ircon witnessed a slowdown in international orders.

5. Valuation and Projects:

As of 31 December 2018, RVNL’s order book stood at ₹77,504 crore (10.2 times FY18 revenue), which includes 102 ongoing projects. Out of this, Railways accounted for 96.11% of its total order book.

A total of 154 new line projects with a length of 17,105 km are planned by Railways for FY2016–25, costing Rs 1,73,400 crore. Besides, gauge conversion (42) and doubling (166) projects with a length in excess of 9,000 km each are estimated at Rs 41,800 crore and Rs 53,100 crore, respectively.

The company is aiming to complete pending orders worth Rs 40,000 crore in next 2–3 years. At the upper end of the price band, the stock is valued at of 7 times FY18 earnings against IRCON International’s 9.5 times.

6. Discount on Offer Price

Minimum bid lot is 780 equity shares and in multiples of 780 equity shares thereafter. A discount of 50 paise per share on the final offer price will be offered to retail investors and eligible employees.

7. Better ROE, ROA, ROCE:

8. Major Client:

Indian Railway is the major client of the company and public sector undertakings, state, and central government departments, ministries are the other clients.

Issue Open: Mar 29, 2019 — Apr 3, 2019
Issue Size: 253,457,280 Eq Shares of Rs 10
Face Value: Rs 10 Per Equity Share
Issue Price: Rs 17 — Rs 19 Per Equity Share
Retail Discount: ₹0.50
Employee Discount: ₹0.50
Market Lot: 780 Shares
Min Order Quantity: 780 Shares
Listing At: BSE, NSE