Mumbai : Ircon International made a tepid stock markets debut on Friday. The state-owned railway engineering and construction company ended at ₹ 415.30, down 12.5% from its issue price of ₹ 475 a piece. The shares were listed at ₹ 412 on the NSE, a discount of 13.2% from its issue price. The ₹ 467 crore initial public offer (IPO) was subscribed 9.9 times during its share sale between 17-19 September with a price band of ₹ 470-475 per share.

After RITES Ltd, this is the second stock market listing by a public sector undertaking firms in financial year 2019. As a part of its disinvestment plans, the government is selling around 10% stake in Ircon to raise around ₹ 467 crore.

Ahead of its share sale, analysts had said that the issue was fairly valued. “Adjusting for subsidiary investments worth ₹ 700 crore, the issue is available at 9.2 times FY18 EPS on the higher band, which is attractive," ICICI Securities said in a note on 12 September.

Over 2014-15 to 2016-17, Ircon’s financials were muted which picked up in 2017-18, recording revenue and net profit growth of 31% and 24%, respectively. Ircon’s order book grew at a compounded annual rate of 12.9% to ₹ 22,400 crore over 2015-16 to 2017-18.

Of the total, railway projects comprise 86.7%, highway sector 5.6%, electrical works 5.4% and building sector 2.2%. Major domestic clients for the company include Northern Railways, Dedicated Freight Corridor Corporation of India, National Institute of Technology (Mizoram) and National Highways Authority of India, among others.

According to Motilal Oswal Securities Ltd, a significant portion of contracts is awarded on a nomination basis while government policy could materially impact Ircon’s financials.

Ircon provides engineering and construction services to the infrastructure sector. Although the company’s primary focus is on railways, in order to diversify, it has expanded into allied areas like highway and road construction. Ircon is looking at increasing its presence in the international market and focusing on high value projects.

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