IRCTC down 9% in 2 days amid OFS by govt; stock slips below floor price

With today's low of Rs 668.25, the stock has fallen below its floor price of Rs 680 per share set for Offer for sale

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) fell 3 per cent to Rs 668.25 on the BSE in Friday's intra-day trade amid heavy volumes. In the past two trading days, the stock of the tour and travel related services company has dipped 9 per cent after the government announced its partial stake sale via offer for sale (OFS).

Currently, the stock has fallen below its floor price of Rs 680 per share set for the OFS. The OFS for non-retail investors opened on Thursday, and for retail investors on Friday.

At 02:43 PM, IRCTC was quoting 2.4 per cent lower at Rs 672.65, as compared to 0.55 per cent decline in the S&P BSE Sensex. The average trading volumes on the counter rose by over three-fold with a combined 8.2 million shares having changed hands on the counter on the NSE and BSE.

The government's OFS of shares in IRCTC received an overwhelming response from institutional investors on Thursday, making way for the Centre to use the greenshoe option. The OFS garnered bids for 55 million shares, as against 40 million on offer.

Meanwhile, in the September quarter (Q2FY23), IRCTC's revenues doubled on YoY basis (due to lower base). However, it declined on QoQ basis due to seasonality in catering revenues.

"Going forward, the company is witnessing healthy traction in catering revenues (up 3x over FY22-FY25) as it returns to pre-Covid levels and has increased license income led by higher pricing. Internet ticketing (10 per cent CAGR) will be hit by lower 2S revenues, however, will be compensated by increased acceptance of online ticket booking," according to analysts at IDBI Capital.

Further, tourism is also expected to improve led by increase in travelling and higher occupancy in Tejas. The brokerage firm expects profitability to taper but remain above pre-Covid level led by focus on e-catering and advertisement & license fees.

October has observed good demand on the back of festive season. During Q2, profit from Tejas train stood at Rs 9.3 crore with occupancy of 73 per cent-83 per cent. Management expects Nov and Dec to be better months. Air ticketing generated revenue of Rs 5 crore and is expected to do better going forward as 2 tenders are in pipeline. Bus & hotel booking to observe uptick with increase in number of travelers, analysts said.