Shares of state-owned Indian Railway Catering and Tourism Corporation (IRCTC) have been on a bumpy ride in the past few trading sessions. The stock declined 14 per cent to hit an intraday low of Rs 3,960.05 on the BSE after it came out of the futures and options ban list on Monday.
On October 19, the PSU stock rose by 9 per cent to hit an all-time high of Rs 6,393, becoming the ninth public sector entity to join the club of Rs 1 lakh crore market capitalisation (m-cap). However, the stock witnessed a sudden correction of more than Rs 1,000 amid profit booking and ended 8.75 per cent lower at Rs 5,363 on the BSE. The shares have fallen nearly 33 per cent in one week.
IRCTC entered the markets in October 2019 and has delivered multibagger return to its shareholders in the last 12 months.
The stock has risen 187 per cent since the beginning of this year. The shares stand higher than the 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages.
“The internet ticketing segment which contributes around 53 per cent of revenue is likely to increase in Q2 and upcoming quarters on the back of unlocking of economy and festival season. Easing of travel restrictions by almost all states is very positive for the company as new trains will start and this will benefit all segments, especially the catering segment which contributes around 27 per cent revenue,” Akhil Rathi, Vice President Advisory at Marwadi Shares and Finance Limited told BusinessToday.In.
“The stock is likely to be under pressure in the upcoming weeks due to a strong run-up and this will be an opportunity for investors to accumulate the stock for the long term,” he added.
According to Dolat Capital, IRCTC is a multi-year high-growth compounding story. The company witnessed a significant jump in passenger volumes travelling (expected to go up 100 per cent QoQ) as the COVID impact eased out, leading to resumption of more train services/frequencies. This would drive a revival in the ticketing business in Q2 and the rest of the other segments by Q3.
“For the quarter Q2FY22, bookings are higher by 100 per cent on a QoQ basis and up 15 per cent higher than pre-COVID volumes. We maintain our Accumulate view with DCF based target price of Rs 5,200,” it stated in a research report.
“An uptick in the number of passengers and tickets booked as well as in the number of trains operating should result in robust revenue growth in Q2 FY22,” said IDBI Capital.
“We expect a strong sequential pick-up in revenues driven by the internet ticketing and catering business. We estimate that the share of catering business should increase to 41 per cent, while the internet ticketing segment should continue to contribute the highest towards overall revenues (+49 per cent share),” it stated in its research report.
IRCTC is the only entity authorised by the Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India.
It has a dominant position in online rail bookings and packaged drinking water space with around 73 per cent and 45 per cent market share, respectively.
Shares of the company closed 12.92 per cent lower at Rs 4,024.65 on the BSE on Monday.