IRCTC hits all-time high; stock rallies 32% in a month on improved outlook

The stock jumped 7% to Rs 2,015 in the intra-day trade on Thursday, and surpassed its previous high of Rs 1,995 touched on February 25, 2020

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) hit an all-time high of Rs 2,015, up 7 per cent on the BSE in the intra-day trade on Thursday, as analysts remain bullish on the counter.

The stock of the government-owned railways' catering and ticketing company, which surpassed its previous high of Rs 1,995, touched on February 25, 2020, has appreciated by 32 per cent over the past one month as compared to less than 1 per cent gain the S&P BSE Sensex.

IRCTC offers a monopolistic opportunity in online rail ticketing, sale of Packaged Drinking Water (PDW) and catering services (in Train as well as around 600 stations) for Indian Railways. Contrary to most other monopolistic plays, IRCTC assures low pricing and high quality experience for its customer base.

"Robust adoption of online ticketing during pandemic, conversion of unreserved coaches into 2S category boosting TAM for Ticketing, multi-fold scale-up in PDW capacity, entry into passenger rail-operations (3 trains, more to follow) and 60 per cent jump in catering pricing are likely to act as a ‘profit windfall’ in coming quarters and should boost the financial growth, return ratios, and operating metrics for IRCTC," opine analysts at Dolat Capital.

The multiple levers for growth specifically conversion of unreserved coaches into 2S would be more than suffice to cover up for growth lost due to COVID pandemic. Factoring in the opportunities across business segments and the huge scale/multitude opportunities that IR offers along-with gradual expansion in non-IR revenue stream (E-catering, air/bus ticketing, hotel booking); we expect a revenue/earnings CAGR of 16 per cent/23 per cent over FY20-25E, the brokerage firm said in initiate coverage report dated February 24 with a TP of Rs 2,650.

At 12:07 pm, the stock was trading 6 per cent higher at Rs 1,989 on the BSE, as compared to a 0.79 per cent decline in the S&P BSE Sensex. Trading volumes on the counter jumped 1.6 times with a combined 6.8 million equity shares changing hands on the NSE and BSE till the time of writing of this report.