Reblog: RailTel Corporation IPO review


  • RailTel is ICT infrastructure providers to Indian Railways.
  • The company has posted slow but steady growth for the last three fiscals.
  • RailTel lead the pack of the telecom industry with higher profit margins and ROCE.
  • The issue appears fully priced, but worth considering for long term investment.

ABOUT COMPANY:
RailTel Corporation of India Ltd. (RailTel) is an information and communications technology (“ICT”) infrastructure provider and one of the largest neutral telecom infrastructure providers in India (Source: CRISIL Report). It is 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. The company was 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.

As of January 31, 2021, RailTel’s optical fiber network covers 59,098 route kilometers and covers 5,929 railway stations across towns and cities in India. The transport network is built on high capacity dense wavelength division multiplexing (“DWDM”) technology and an Internet protocol/ multi-protocol label switching (“MPLS”) network over it to support mission-critical communication requirements of Indian Railways and other customers. As of January 31, 2021, under “Railwire” the company has 305746 customers and 5023 AMPs (Access Network Providers) and is an emerging key partner for Indian Railways.

It operates data centers in Gurugram, Haryana and Secunderabad, Telangana to host and collocate critical applications for customers including the Indian Railways. In addition to strategic and critical network infrastructure services, the company also undertakes various ICT projects for the Indian Railways, central government and state governments, including various train control system projects for Indian Railways. Telecom sector is expected to post CAGR of 11% to 13% till 2025 with rising ARPU.

RailTel has a strategic relationship with the Indian Railways and undertakes a wide variety of projects including the provision of mission-critical connectivity services such as Video Surveillance System (“VSS”) at stations and within trains, ‘e-Office’ services and implementing short-haul connectivity between stations and long haul connectivity to support various organizations within the Indian Railways. It also undertakes various passenger services including Content on Demand (“CoD”) services and Wi-Fi across major railway stations in India. With the latest technologies and diversification plans, the company is gearing for steady growth going forward in India and neighbouring countries.

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