Shares of Indian Railway Catering and Tourism Corporation (IRCTC) have dipped 19% since the stock was split in the ratio of 1:5 on October 28 last year. However, before the stock split, the IRCTC shares hit a record high of Rs 1,279 (adjusted to stock split) on October 19, 2021. They doubled investor wealth, rising over 100 percent, in the last three months preceding the record high date.
In 2022, the stock of the Indian Railways’ subsidiary has slipped 20% against a 5% rise in the benchmark Sensex. The large cap stock has lost 15.59% in a year.
Currently, IRCTC stock is trading in the oversold zone. The stock has a Relative Strength Index (RSI) of 29. A value below 30 indicates that a stock is oversold and a value above 70 signals that the scrip is overbought. The stock has a price to equity ratio of 60.34, which is higher compared to the industry PE of 50.45. This signals that the stock is overvalued compared to its peers.
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IRCTC stock has a one-year beta of 1.28. 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.
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’s annual earnings too have been very encouraging.
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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.
In today’s trade, the IRCTC stock fell 0.98 per cent intraday to Rs 670.05 against the previous close of Rs 676.65 on BSE. IRCTC shares are trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages. Total 0.57 lakh shares of the firm changed hands amounting to a turnover of Rs 3.82 crore on BSE. Market cap of the firm fell to Rs 53,604 crore. IRCTC shares are trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
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Here’s a look at what analysts said about the weak sentiment in the IRCTC stock and how much time it is likely to take to recover.
Abhijeet from Tips2trade said, “A monopolistic business with strong fundamentals fuelled by high increase in passenger travel compared to the last three years augurs well for IRCTC stock price in the coming months. Fundamentally, the stock is almost at its lowest PE ratio along with being technically oversold on the Daily charts. Investors should buy on a dip till 620-630 levels or a sustained daily close above 702 for targets of 810-892 in the coming months.”
Manoj Dalmia, founder and director, Proficient Equities said, “IRCTC looks somewhat slow with weak quarterly results and there is some uncertainty in the stock since it was said that the government may consider having its share in the convenience fee charged on booking of tickets. IRCTC stock has been moving sideways and the current chart structure does not suggest any strong trend. Investors can expect some up moves in a shorter span as it is near a support level and which can be seen as an opportunity to accumulate.”
Ravi Singhal, CEO, GCL said, “As stock have selling pressure from Government for stake sale, which has overcome now. We think now it can outperform from here for target of Rs 970 with a stop loss of Rs 625.”
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Vinit Bolinjkar, Head of Research, Ventura Securities said, “Shares of IRCTC got banned in the F&O on Dec 16, 2022 because the derivative contracts in the stock crossed 95% of the market-wide position limit (MWPL). It resulted in a significant fall in its stock price. No new positions can be created in the derivative contracts for IRCTC stock and this prohibition is lifted only when the open interest (OI) drops below 80% of the MWPL across exchanges. Nothing is wrong with the fundamentals of the company and the recent fall is a short-term impact due to the F&O ban. The IRCTC stock is expected to perform well in 2023 and the company will benefit from increased license income in catering as it returns to pre-COVID levels. In addition, with increased acceptance of online ticket booking, we expect internet ticketing to remain robust. Further, tourism is also expected to improve led by the increase in travelling and the introduction of new Vande Bharat trains. The company’s focus on e-catering initiatives and increasing revenues from advertisement & license fees augurs well for long-term profitability. IRCTC is trading at FY25 P/E of 49.2X, and considering the strong tailwinds, we would recommend to hold the stock in the portfolio.”
Osho Krishan, senior analyst – Technical & Derivative Research, Angel One said, “IRCTC has witnessed a plunge post the OFS announcement and slipped below its 200 SMA on the daily chart. The stock has entered the oversold region, having immediate support placed around Rs 660, followed by Rs 635. On the higher end, the primary hurdle is seen at the bearish gap of the Rs 700-725 odd zone, which even coincides with the 200 SMA. Hence, until we witness the gap being filled, the stock is likely to remain within the mentioned range.”
Apurva Sheth, Head of Market Perspective & Research, Samco Securities said, “IRCTC has been trading in oversold zone on the back of announcement of offer for sale by the government. The revenues have been above the pre-pandemic levels in H1FY23. Being a monopoly, the company has more aspects to grow across business verticals. With tourism rebounding, price hikes in the catering segment and expansion in Rail Neer, the company is better placed to reap benefits from increasing demand. On the valuation front, it is currently traded at a PE of 60, much below its 3-year and 1-year avg PE’s of 79.4 and 76.6 respectively. Taking these factors into consideration, the stock is expected to rebound soon, though there might be some short-term hiccups.”
Ameya Ranadive, Equity Research Analyst at Choice Broking said, “IRCTC shares dropped 8.5% to Rs 676.80 on the NSE in three days after the government set the floor price at Rs 680 per share for the sale of its stake through an offer for sale (OFS). IRCTC had been consolidating in the 730 to 700 range prior to this announcement and was about to break out, but the government’s announcement of a 5% stake sale slowed the momentum. IRCTC is currently in a poor trend because it is trading below all of its moving averages, particularly the 20, 50, 100, and 200 day EMAs on the daily chart. The oversold level of 30 on the RSI indicates that the bounce will occur in the mid-term. A solid support may be found on daily charts between 660 and 640 levels. Around 640 to 660 levels, IRCTC should experience a price as well as a time consolidation. IRCTC is anticipated to benefit most from the increase in catering costs and the growth of the rail network, which will also be a positive factor. If current 660-640 levels are maintained, we should expect a 15%-20% increase in FY23, with targets possibly set at 760-795.”
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