This PSU stock has delivered over 10x returns in less than two years

The IRCTC scrip is riding a crest. In less than two years since its listing, the company has entered the club of top 100 most valuable listed companies on BSE as its market capitalsation has surpassed the Rs 50,000 crore mark. Since October 14, 2019, the stock skyrocketed 10x to Rs 3,305 in today’s session compared to its issue of Rs 320 making it the biggest wealth creating PSU over the last eighteen months. The counter however ended today’s session at Rs 3,295.90 per share.

IRCTC, a Mini Ratna public sector enterprise under the administrative control of the Ministry of Railways, is the sole entity authorised by Indian Railways (IR) to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India. As of 30 June 2021, the Government of India held 67.4% stake in the company.

Stock split

Almost a month the company’s board has recommended the proposal for sub-division of the company’s one (1) equity share of the face value of Rs 10/- each into five (5) equity shares of the face value of Rs 2 each, subject to the approval of Ministry of Railways, shareholders and other approvals as may be required.

The state-run online portal and catering major posted a net profit of Rs 82.52 crore from continuing operations for the quarter ended Q1FY22 versus a loss of Rs 24.60 crore during the same period last year. However, on a sequential basis, there was a dip of 20% quarter-on-quarter (QoQ) during the reporting quarter as against the Q4FY21 quarter at Rs 103.78 crore.

On top line front its revenue from operations saw a jump of 85% to Rs 243.37 crore in Q1FY22 compared to Rs 131.33 crore in the same quarter of last year. While on the QoQ basis the revenue dipped by 28% from Rs 338.79 crore reported in Q4FY22.

Outlook

IRCTC still has a lot of steam left as online ticket booking reached almost pre-Covid level. Besides religious tourism is working well for the company and will soon announce new special trains and packages. That apart the company is in advance talks with cruise operators to onboard them on the IRCTC platform for marketing and booking purposes. Further, the company is also working on innovative tourism packages for bike riding in areas like Leh, Ladakh, Tawang and others

Commenting on IRCTC, Santosh Meena, head of research, Swastika Investmart said: “IRCTC is in strong bullish momentum. The reopening theme is getting momentum whereas it has a tailwind of stock split news. Railways’ asset monetisation plan is another trigger for its re-rating. The bullish momentum may continue while Rs 3,070-3,100 is an immediate resistance zone.”

Likewise Ravi Singhal, Vice Chairman at GCL Securities is also bullish on the counter and is of the opinion that IRCTC share price rally is mainly because of the company’s aggressive focus on its hospitality business where it has been making tie-ups with hotels, aviation and surface transport service providers. “It is also tying up with local food suppliers that means the IRCTC management is in the mood to emerge as A to Z solution provider in the hospitality sector. One should hold or buy this counter for the long-term keeping an 18 to 24-month target of Rs 5,000,” Singhal said.

Even Gaurav Garg of CapitalVia Global Research believes that IRCTC can touch Rs 4,000 in the near term. According to him, IRCTC is just not an E-ticketing business as it has emerged in areas like the Food, hospitality business, moreover it has emerged as a transport business. Now, it has become one of the biggest homegrown E-commerce platforms.

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