The shares of state-owned Indian Railway Catering and Tourism Corporation (IRCTC) have breached the key support level of Rs 633 in the last few sessions. Prior to this, the stock had breached the same level in the form of resistance six months ago. Since then, the stock has seen some buying activity before breaking the support level, indicating that selling in the script has likely reached its fag end. IRCTC shares are trading higher than the 5-day moving averages but lower than the 20-day, 50-day, 100-day and 200-day moving averages.
In a year, the stock has tumbled 25%. However, it has outperformed in three years surging 260% during the period. In today’s trade, the IRCTC stock fell 0.95 per cent to Rs 632.75 against the previous close of Rs 638.85 on BSE. The large cap stock has fallen after three days of consecutive gain. Total 1.64 lakh shares of the firm changed hands amounting to a turnover of Rs 10.38 crore on BSE. Market cap of the firm fell to Rs 50,628.
Currently, IRCTC stock has a price to equity ratio of 56.97, which is higher compared to the industry PE of 50.45. This signals that the stock is overvalued compared to its peers.
IRCTC stock has a one-year beta of 1.3. This signals the stock has very high volatility and carries higher risk. A high-beta stock can rise much faster than the index, but also decline much more steeply during corrections.
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In terms of earnings, the arm of Indian Railways put up a good show in the second quarter of the current fiscal. IRCTC reported a 42.54% growth in profit after tax (PAT) to Rs 226.03 crore in the September quarter of FY23 against Rs 158.57 crore in the corresponding quarter of last year. Revenue from operations zoomed 99% to Rs 805.80 crore in Q2FY23 from 404.93 crore in Q2FY22. The company’s total expenses rose 152.84% to Rs 524.33 crore in the quarter under review from Rs 207.37 crore in Q2FY22.
The company reported a stellar set of earnings on an annual basis. Net profit for the fiscal ended March 2022 zoomed 249% to Rs 663.69 crore against Rs 189.90 crore for the fiscal ended March 2021. Sales too zoomed 140% to Rs 1,879.48 crore for the fiscal ended March 2022 against Rs 783.05 crore in the preceding fiscal.
Here’s a look at what analysts said about the weak sentiment in the IRCTC stock and on the opportunities, it presents to investors.
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas said,”IRCTC has been correcting in Complex Corrective pattern (W-X-Y-X-Z) and currently it is in the final leg i.e. wave Z of that pattern as per the Elliott wave principle. The stock is likely to drift lower and any pullback is likely to be sold into. On the downsid, the stock can test levels of Rs 500 – 480 where support in the form of the lower end of the falling channel is placed.”
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Manoj Dalmia, Founder & Director at Proficient Equities said, “IRCTC has broken its recent support at around Rs 663 and investors can expect some retracement at current levels. They should not mistake it for a trend change. Rs 563 can be a good level to accumulate as it is a strong support.”
Osho Krishnan, Sr Analyst- Technical and Derivative Research, Angel One said, “IRCTC has seen a massive correction of over 15 percent in the past couple of trading weeks. Currently, the stock is hovering well below its major moving averages on the daily chart and is looking weak. On the lower end, the immediate support is placed around Rs 600 odd zone. On the higher end, Rs 660 is likely to be the first resistance, followed by the bearish gap of Rs 682- Rs 687.”
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Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher said, “IRCTC after the steep correction witnessed from Rs 740 levels has shown signs of bottoming out near Rs 605 levels and with a decent pullback indicated has scope for some further upside move till the resistance zone of 660 levels with the RSI also reversing from the highly oversold zone to indicate some signs of improvement. A decisive breach above Rs 660 zone would further strengthen the trend to anticipate for retesting the previous peak zone of Rs 720-740 levels.”