RAILTEL IPO
(ZEE BUSINESS)
|
BASIC DETAILS ABOUT
IPO (16 Feb-18 Feb) |
|
|
Price Band |
93-94 |
|
Bid Lot |
155 |
|
OFS- AT
Upper Band |
819.3cr |
|
OFS (Shares)-Cr |
8.7cr |
|
Total issue amount- AT Upper Band |
819.3cr |
|
Post issue Implied Market Cap |
3017cr |
|
Post issue (Shares) Cr |
32.09 |
|
Book Runner and Lead Managers: ICICI securities, IDBI Capital & SBI Capital
Market Ltd |
|
|
SHAREHOLDING |
||
|
Particular |
Pre-Issue |
Post-Issue |
|
Promoter |
100% |
72.8% |
|
Public |
- |
27.2% |
|
Total |
100% |
100% |
ABOUT TELECOM INDUSTRY
The Indian telecom services industry can be broadly segregated into wireless, wireline and enterprise services.
1) WIRELINE
·
Fixed Line telephony
·
Broadband
2) WIRELESS
·
Cailing
·
SMS
·
Wireless Broadband
·
Video Conferencing
·
Triple play &
·
OTT
3)Enterprise Services
·
Fibre Leasing
(i) they provide corporate offices with high capacity connection to the internet, and
(ii) they connect the local network of several corporate offices to form a wide area-network.
Bharti Airtel Limited, BSNL , RailTel , Tata Communications Limited, and Vodafone Idea Limited are the major players providing such services in India.
·
Tower collocation:
This is a service provided by an infrastructure provider (“IP”) companies who lease out their existing base transceiver stations (“BTS”) and RF/IP antennas to wireless communication providers for data and voice transmission.
Bharti Infratel Limited, Bharti Airtel Limited, GTL Infrastructure Limited, Indus Towers Limited, Reliance Jio Infocomm Limited, RailTel and Vodafone Idea Limited are the main players providing tower co-location services.
·
VPN – Virtual Private Network
A VPN uses public telecommunication infrastructure, such as the internet, to securely connect remote sites/ users to the organisation’s network.
·
MPLS: Multi-Protocol Label Switching :
To provide traffic isolation and differentiation without substantial overheads, MPLS is among the commonly used methods to create VPNs
·
VSAT- Very Small Aperture Terminal
VSAT refers to a small fixed earth station, which provides the vital communication link required to set up a satellitebased communication network. It refers to receiving/ transmit terminals installed at dispersed sites connecting to a central hub through satellite
·
NLD: National Long distance
A network connecting different short distance charging areas or SDCAs. Such a service provider is usually a telecom operator providing the required digital capacity to carry long distance telecommunication services within the scope of their license:
BSNL, Bharti Airtel Limited, Mahanagar
Telephone Nigam Limited, Power Grid Corporation of India Limited, RailTel, Tata Communications Limited,
Reliance Jio Infocomm Limited and Vodafone Idea Limited.
·
ILD : International long distance
ILD service is defined as a network carriage service, providing NLD operators with international connectivity by connecting to network facilities operated by foreign carriers in other countries. It involves setting up of undersea fiber cables to transmit voice and data globally as radio wave transmission through towers is not possible over such a long distance.
The major players operating with ILD license in India are AT&T Global Network Services India, Bharti Airtel Limited, BSNL, Reliance Jio Infocomm Limited, Sprint Telecom India Limited, Tata Communications Limited, Verizon Communications India Limited, and Vodafone Idea Limited.
·
DLC: Domestic leased circuits
DLC refers to a leased circuit
that is connected to a subscriber's premises within India. The telecom service
providers provide DLCs to connect two or more customer sites or customers to
their own or other service provider's network.
The major players currently operating in
the DLC business in India include Bharti Airtel Limited, BSNL, RailTel, Tata Communications Limited and
Vodafone Idea Limited.
·
IPLC: International Private leased circuit
An IPLC is a point-to-point private line used by an organization to communicate between geographically dispersed offices that need dedicated international connectivity with a committed bandwidth.
The major players currently providing international leased line services in India include Bharti Airtel Limited, BSNL, Reliance Jio Infocomm Limited, Tata Communications Limited and Vodafone Idea Limited.
·
Data Centre :
A data center houses and maintains back-end information technology (“IT”) systems and data stores (mainframes, servers and databases). Data centres also provide support to companies by offering extensive IT infrastructure, including servers, firewalls, storage systems and various other IT components, in a different place.
Bharti Airtel, Reliance
Datacenter, Sify Technologies, STT Global Data Center, Vodafone Idea and
RailTel are some of the players providing data centre services in India.
·
DTH
Key Financial Parameters
of Telecom Companies
ABOUT Company’s Business
·
Incorporated on September 26,
2000 with the aim of modernizing the existing telecom system for train control,
operation and safety and to generate additional revenues by creating nationwide
broadband and multimedia network by laying optical fiber cable by using the
right of way along railway tracks.
·
An information and
communications technology (“ICT”) infrastructure provider
·
One of the largest neutral
telecom infrastructure providers (Neutral means not tied to any one service
provider)
·
A Mini Ratna (Category-I)
Central Public Sector Enterprise, wholly-owned by the Government of India and
under the administrative control of the Ministry of Railways
·
Railways have agreed to
authorize RailTel to use their right of way for the purpose of
establishing and OFC(Optical Fibre cable) network by laying, amongst others,
cables and pipes, and transfer their existing OFC assets to RailTel. The
agreement between Ministry of Railways and RailTel also dictates that RailTel
will commercially exploit the surplus capacity of the network while the
Ministry of Railways will continue to make captive use of the same, thus making
RailTel a key network for the Indian Railways
·
As of January 31, 2021, Company
have exclusive right of way along 67,415 route kilometers connecting 7,321
railway stations for laying optical fiber cable.
|
Balance
sheet |
||||
|
Particulars |
30-Sep-20 |
31-Mar-20 |
31-Mar-19 |
31-Mar-18 |
|
PPE |
581.7 |
608.6 |
786 |
684.3 |
|
% of
Total Assets |
23.4% |
25.4% |
35.3% |
29.5% |
|
Capital WIP |
231.5 |
252.5 |
300 |
364.1 |
|
% of
Total Assets |
9.3% |
10.5% |
13.5% |
15.7% |
|
Total PPE+Capital WIP |
813.2 |
861.1 |
1086 |
1048.4 |
|
% of
Total Assets |
32.8% |
35.9% |
48.7% |
45.1% |
|
Right of Use Assets |
167.5 |
172.9 |
0 |
0 |
|
% of
Total Assets |
6.7% |
7.2% |
0.0% |
0.0% |
|
Trade receivable |
656.5 |
507 |
459.6 |
466.7 |
|
% of
Total Assets |
26.4% |
21.1% |
20.6% |
20.1% |
|
Cash & Bank Balance |
368.9 |
268.4 |
406.8 |
509.1 |
|
% of
Total Assets |
14.9% |
11.2% |
18.3% |
21.9% |
|
Other Current Financial Assets |
216.9 |
213.5 |
117.9 |
112.2 |
|
% of
Total Assets |
8.7% |
8.9% |
5.3% |
4.8% |
|
Other Current assets |
104.2 |
93.7 |
73.4 |
51.4 |
|
% of
Total Assets |
4.2% |
3.9% |
3.3% |
2.2% |
|
Equity |
1394.6 |
1369.4 |
1289.1 |
1229.2 |
|
% of
Total Liabilities |
56.2% |
57.1% |
57.9% |
52.9% |
|
Trade Payable |
407.9 |
378.8 |
266.8 |
270.9 |
|
% of
Total Liabilities |
16.4% |
15.8% |
12.0% |
11.7% |
|
Other Current Liability |
311.7 |
275.9 |
333.2 |
358.3 |
|
% of
Total Liabilities |
12.6% |
11.5% |
15.0% |
15.4% |
|
Total Assets/Liabilities |
2482.2 |
2398.1 |
2227.7 |
2322.9 |
|
P&L |
||||
|
Particulars |
30-Sep-20 |
31-Mar-20 |
31-Mar-19 |
31-Mar-18 |
|
Revenue from Operation |
537.4 |
1128 |
1003.2 |
976.8 |
|
% Growth |
|
12.4% |
2.7% |
|
|
Other Income |
15.6 |
38 |
35.2 |
42.9 |
|
% of Revenue |
2.9% |
3.4% |
3.5% |
4.4% |
|
Access and other charges |
149.1 |
249 |
263.5 |
250.1 |
|
% of Revenue |
27.7% |
22.1% |
26.3% |
25.6% |
|
Expenses on Project |
110.7 |
340.1 |
249.4 |
253.3 |
|
% of Revenue |
20.6% |
30.2% |
24.9% |
25.9% |
|
Employee benefit expenses |
66.9 |
120.5 |
112 |
118 |
|
% of Revenue |
12.4% |
10.7% |
11.2% |
12.1% |
|
Depreciationa and Amortisation |
81.7 |
130.9 |
111.6 |
118.6 |
|
% of Revenue |
15.2% |
11.6% |
11.1% |
12.1% |
|
PBT |
62.2 |
184.8 |
217.7 |
159.6 |
|
PBT Margin |
11.6% |
16.4% |
21.7% |
16.3% |
|
PAT |
45.6 |
178.7* |
135.3 |
134 |
|
PAT Margin |
8.5% |
12.5% |
13.5% |
13.7% |
|
Revenue from Operation |
||||
|
Particulars |
30-Sep-20 |
31-Mar-20 |
31-Mar-19 |
31-Mar-18 |
|
Revenue from Operation |
537.4 |
1128 |
1003.2 |
976.8 |
|
Bifurcation (A)+(B) |
||||
|
Income from Telecom services (A) |
401.6 |
744.8 |
671.4 |
685 |
|
% of Revenue |
74.7% |
66.0% |
66.9% |
70.1% |
|
Bifurcation of Income
from Telecom Services (C)+(D)+(E) |
||||
|
National Long Distance Service(NLD) (C) |
212.7 |
415.1 |
372 |
390 |
|
% of Income from telecom
Services |
53.0% |
55.7% |
55.4% |
56.9% |
|
Bifurcation of NLD
Services |
||||
|
Leased Line Services |
136.3 |
266.3 |
258.7 |
310.7 |
|
% of Total revenue |
25.4% |
23.6% |
25.8% |
31.8% |
|
Internet Service Provider
(D) |
107 |
166.2 |
162.3 |
147.8 |
|
% of Income from telecom
Services |
26.6% |
22.3% |
24.2% |
21.6% |
|
Bifurcation of Internet
Service Provider |
||||
|
Internet Leased Line |
26 |
58.3 |
59 |
48.7 |
|
% of Total revenue |
4.8% |
5.2% |
5.9% |
5.0% |
|
Revenue from leased Operations |
162.3 |
324.6 |
317.7 |
359.4 |
|
% of Total revenue fro m
Leased business |
30.2% |
28.78% |
31.67% |
36.79% |
|
Passive Infrastructure Services (E) |
81.9 |
163.4 |
137.2 |
147.5 |
|
% of Income from telecom
Services |
20.4% |
21.9% |
20.4% |
21.5% |
|
Income from Projects (B) |
133.7 |
377.2 |
296.9 |
291.3 |
|
% of Revenue |
24.9% |
33.4% |
29.6% |
29.8% |
|
Bifurcation of Income
from Projects (F)+(G) |
||||
|
Railway Project Works
(F) |
58.4 |
188.9 |
31.9 |
35.4 |
|
% of Income from Projects |
43.7% |
50.1% |
10.7% |
12.2% |
|
Other Projects
(G) |
75.3 |
188.3 |
265 |
255.9 |
|
% of Income from Projects |
56.3% |
49.9% |
89.3% |
87.8% |
ABOUT PROMOTER/MANAGEMENT
·
Puneet Chawla is the Chairman and Managing Director of the company
since December 14, 2018.
Prior to joining the company, he has held positions such as Executive Director (Safety) in the Railway Board of MoR, Divisional Railway Manager, Ajmer, Chief Project Manager, Indian Railway Project Management Unit, General Manager, Rail Vikas Nigam Ltd.
He has been conferred upon “Eminent Engineer Award for the year 2020” by the Institution of Engineers (India). He has over 33 years of experience in Indian Railways.
·
Sanjai Kumar is the Director (Network, Planning and Marketing)/Whole
Time Director of the company.
He has over 27 years of experience of
working as an officer of the Indian Railway Service of Signal Engineers
(“IRSSE”) including over 18 years of experience of managing projects and
marketing departments in the company.
PRO’s
·
Company enjoys exclusive right of way for laying
optical fibre along 67,415 route kms connecting 7,321 railway stations , earns revenue from
Telecom services like leased line services, internet service provider and from
various projects like Wifi across major railway stations, Campus Wifi in
Central Universities and also other projects like state wide area network etc
for other enterprise. Hence business is diversified and the segment in which
company operates has good growth also enjoys exclusive rights feature.
·
Business is kind off slowly but
steadily growing kind which can also be seen by its Financials also upcoming
projects like Modern Train Control system ,Village connectivity (6lac villages
in 1000 days) , also company in discussions with the Ministry of Education for
providing end-to-end e-learning systems for schools can give good potential for
business.
|
P&L |
||||
|
Particulars |
30-Sep-20 |
31-Mar-20 |
31-Mar-19 |
31-Mar-18 |
|
Revenue from Operation |
537.4 |
1128 |
1003.2 |
976.8 |
|
% Growth |
|
12.4% |
2.7% |
|
|
PAT |
45.6 |
141.1 |
135.3 |
134 |
|
PAT Margin |
8.5% |
12.5% |
13.5% |
13.7% |
|
PAT (Excluding
Exceptional item) |
45.6 |
178.7 |
135.3 |
134 |
|
PAT Margin(excluding exceptionl) |
8.5% |
15.8% |
13.5% |
13.7% |
·
Management in an interaction told to us around 60%
of its Revenue comes from other government and remaining from others also
around 30-36% of its Total revenue of
last 3 years is fixed in nature (Lease) which seems long term in nature so that
gives a sense of revenue visibility.
|
Revenue from Operation |
||||
|
Particulars |
30-Sep-20 |
31-Mar-20 |
31-Mar-19 |
31-Mar-18 |
|
Revenue from
Operation |
537.4 |
1128 |
1003.2 |
976.8 |
|
Revenue from
leased Operations |
162.3 |
324.6 |
317.7 |
359.4 |
|
% of Total revenue from Leased business |
30.2% |
28.78% |
31.67% |
36.79% |
·
Although company has no listed peer but based on the
comparison of various telecom service provider, Although company is smallest of
all but has given 2nd highest CAGR growth in Operating revenue, Best
PAT margin and ROCE .
·
Not only company is debt free and company has
cash/Bank balance as on 30 September 2020 of Rs 369cr which is 11.5 per share
also due to the fact that almost 30-40% of the Total Expenses amount for the
year company already receive in Advance.
|
Insight |
||||
|
Particulars |
30-Sep-20 |
31-Mar-20 |
31-Mar-19 |
31-Mar-18 |
|
Total
Expenses |
491.6 |
931.9 |
820.6 |
835.1 |
|
Other Current
Liability |
|
13.6% |
-1.7% |
|
|
Advances |
279.7 |
230.7 |
295.4 |
316.6 |
|
Advances/Total Expenses |
- |
31.7% |
38.6% |
- |
·
Company’s
management has good experience and history.
·
As
company have its optical fibre network and provide service in those areas only
, thus you see no spectrum charges in books for 1HFY21 or FY20 and insignificant
charges in FY19 and FY18 thus eliminates risk associated or cost associated
with spectrum .
CON’s
·
Company’s business model is not such which could
give exponential growth , also operates in the telecommunication Industry which
has fierce competition with highly regulated segment but enjoys a good
financials owing to exclusive Right of way from Ministry of Railways also have
around 60% of its revenue dependency on Government, any change in MoR stance
can pause a major risk.
·
Company is valued at PB of 2.7 times and PE of 20.4
based on FY20, So valuations are not cheap also PAT margin rose to 15.8% but
fallen to 8.5% in 1HFY21 although mostly because of charges which are kind of
permanent in nature and also increased depreciation (Which has to be clarified
from management) but PAT margin of around 13% seems sutainable.
·
Receivable
days stands at 156 days which is at Higher end thus posses risk also
interesting is in 1HFY21 Provision for expected credit loss 34.2cr was debited in P/L under Administrative
expenses which is 6.7% of Total Debtors as on 31 March 2020 , Nature of the
same is not clear and how much more could that be possible also not clear.
Anchor
Book
Company
raised 244cr from the Anchor Investors.
·
HDFC Life 14.34%
·
HDFC Fund 12.30%
·
Nippon Life 12.29%
·
Goldman Sachs 12.29%
·
ICICI Pru 12.28%
·
HDFC Fund 12.30%
·
Aditya Birla Sun Life 8.20%
·
IIFL
Focused Fund 6.15%
·
Others 9.85%
·
TOTAL 100%
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