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RailTel, incorporated on September 26, 2000, is a Mini Ratna (Category-I) central public sector enterprise (CPSE), wholly-owned by the Government of India and under the administrative control of the Ministry of Railways.

It is an information and communications technology (ICT) infrastructure provider and is one of the largest neutral telecom infrastructure providers in India. As of January 31, 2021, its optical fibre network covers 59,098 route kilometre and covers 5,929 railway stations across towns and cities in India.

The company operates data centres in Gurugram, Haryana and Secunderabad, Telangana to host and collocate critical applications for its customers including the Indian Railways. In addition to strategic and critical network infrastructure services, it also undertakes various ICT projects for the Indian Railways, central government and state governments, including various train control system projects for Indian Railways

Among largest neutral telecom infrastructure providers in India

RailTel is one of the largest neutral telecom infrastructure providers in India. As of January 31, 2021, the company had exclusive right of way along 67,415 route kilometre connecting 7,321 railway stations for laying optical fibre cable. RailTel offers leased line and VPN facilities and also provide IP-1 services. It provides strategic and critical network infrastructure to the GoI and certain state governments. The company is also an implementing partner for the Bharat Net project to create optical fibre cable based broadband infrastructure. RailTel has experience in providing managed ICT services to central and state government agencies. Additionally, RailTel has developed a retail broadband network and applications to retail customers across India through ‘RailWire’ platform.

Diversified portfolio of services, solutions

RailTel offers a diversified portfolio of ICT services and solutions including MPLS-VPN, leased lines services, TPaaS, eOffice services and data centre services, large network hardware system integration, software and digital services. RailTel has entered into agreements with telecom companies and MSOs to lease bandwidth and offer last mile optical fibre cable network connectivity across cities and towns in India. In addition, the company provides NLD connectivity for Indian Railways exchanges on NGN technology handling over 0.89 million minutes per month. It also offers digital subscriber line access multiplexer for broadband at railway colonies and provide Wi-Fi in various offices of the Indian Railways.

Key risk & concerns

* RailTel’s operations are subject to governmental regulation regarding licensing, competition, and costs and arrangements pertaining to interconnection and leased lines

* RailTel’s business is substantially dependent on projects awarded by government establishments, including central, state and local authorities and agencies and public sector undertakings

Priced at FY20 P/E of 21.4x on upper band

At | 94 (upper end of the price band), the stock is available at 21.4x FY20 price/EPS.

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