An Indian company has only one client and yet, it's a nearly $3 billion monopoly

Share market enthusiasts in India can’t stop raving about a new kid on the block-- the Indian Railway Catering and Tourism Corporation, IRCTC in short. In just the opening day, the stock more than doubled the wealth of those who bought shares in the initial public offering (IPO) that concluded recently.

This was the best single-day gain for any stock on its debut in the last two years in India. But the signs were visible even before. Early investors wanted 112 times the number of shares offered in the IPO, in a price band of ₹315 to ₹320. The government raised a little less than $100 million from the IPO.

Yet, the fact remains that the company has only client, its parent Indian Railways, but at the same time it has a monopoly that is rarely matched. It's a bit like a guy who started a business whose only client is his father.

There was unmistakable excitement during the IRCTC IPO and why not! The company had a revenue of nearly ₹19,000 crore (nearly $2.7 billion) in the financial year ending March 2019-- clocking over 22% growth in revenue during the year.

Irctc.com had an average of 25 million to 28 million transactions per month, and an average of 7.2 million logins every day, in the five months ending August 2019-- making it one of the most-used websites in Asia Pacific (APAC).

Not only is it the only entity to authorise train bookings in India, it has the solo rights to serve food and beverages to people travelling long distances by train in India. The catering business alone made nearly $1.5 billion for the company last year.

All of this had earned a consistent of return of 23% on the equity every year since 2017, according to HDFC Securities. The beneficiary until now was the company’s only shareholder-- the Government of India. The Indian state’s stake in the company has fallen to 87% post the IPO.

The government sold the shares at ₹315 to ₹320 and on October 15, the day after the listing, the stock was trading at ₹731. Did the Indian government sell it too cheap?

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IRCTC doubles investor wealth as its stock surges 128% on listing