RailTel Corporation defies market rout; rises 33% after strong listing: Here’s what investors should do now

RailTel Corporation of India lists with 16% premium at 109 per share on NSE

Most brokerages had advised subscribing to the issue on the back of robust fundamentals, better margins, diversified portfolio, and expectations of strong growth in the future. The initial public offering (IPO) of the company was subscribed 42.4 times during February 16-18.

Analysts are of the view that investors who received the shares should hold for a long-term due to the company’s strong fundamentals and expectations that it is going to play a key role in the digital transformation of Indian Railways. The government’s aggressive expansion plan with respect to building railway infrastructure over the next five years will further be a key positive.

"Currently, the stock is trading at 26 PE on FY20 trailing basis. Considering this, the company has a diversified portfolio of services and solutions. It is a key partner to the Indian Railways in digital transformation.  We are positive on the long-term prospects of the company, so we advise long-term investors to hold the stock,” said Keshav Lahoti, Associate Equity Analyst, Angel Broking.

Axis Securities believes that the company will continue to grow with the rising digital and telecom needs of the country.

"RailTel is the largest neutral infrastructure provider for telecom services and as the consumption is rising for digital and telecom, we believe the rising consumption will help them grow in the forthcoming quarters,” said Omkar Tanksale of Axis Securities.

“They have a continuous dividend-paying history for the last few years with a dividend pay out ratio of 20 percent. So it is a decent business with decent financials, looks attractive for subscription,” he said.