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IRCTC shares cross Rs 3,000 mark, experts see another 10% upside in near term

IRCTC shares cross Rs 3,000 mark, experts see another 10% upside in near term
September 06
19:04 2021

The rally attributed to the reopening of economy, its monopoly in internet ticketing & catering business, and railways’ asset monetisation plan.

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Indian Railway Catering and Tourism Corporation (IRCTC) shares rallied 6 percent intraday to cross the Rs 3,000 mark and hit a record high of Rs 3,041.20 on September 6.

In the last one year, the stock has registered a 115 percent return, outperforming the benchmark indices as well as broader markets. It was quoting at Rs 3,000.80, up 4.58 percent, at the time of writing this copy.

The rally can be attributed to the reopening of the economy, its monopoly in the internet ticketing & catering business, and railways’ asset monetisation plan.

“IRCTC is in strong bullish momentum where it has gained more than 100 percent in 2021 and crossed the psychological level of Rs 3,000. The correction due to Covid-19 was a great opportunity for portfolio investors to latch onto it as everyone wanted to buy it before Covid-19 at any price because of its monopoly and future growth outlook,” said Santosh Meena, Head of Research at Swastika Investmart.

“The reopening theme is getting momentum whereas it has a tailwind of stock split news. Railways’ asset monetization plan is another trigger for its rerating,” he added.

Experts largely expect the bullish momentum to help the stock march towards Rs 3,300 levels in the near term.

“The bullish momentum may continue while Rs 3,070-3,100 is an immediate resistance zone; above this, it is likely to head towards the Rs 3,300 level,” Santosh Meena said.

According to him, if it witnesses any profit booking from the Rs 3,070-3,100 resistance zone then Rs 2,775-2,700 will be a good buying zone.

Ashis Biswas, Head of Technical Research at CapitalVia Global Research also feels IRCTC has given a breakout of a rising channel confirming more biasness towards higher levels. “We can expect IRCTC to trade till the levels of Rs 3,350 in near future.”

IRCTC had delivered a strong set of numbers despite challenges from the second wave impact during the quarter ending June 2021, as catering segment revenues improved, rail-neer segment turned EBIT positive after 4 quarters and internet ticketing segment continued to deliver strong margins.

“Revenues were higher than estimate due to higher revenue from catering segment, but EBITDA (earnings before interest, tax, depreciation and amortisation) and PAT were in-line. Margins declined sequentially due to lower volumes. The company reported an 85 percent YoY increase in revenues to Rs 243.4 crore, driven by a pick-up in revenues across all business segments, but largely driven by the internet ticketing segment (now over 60 percent of revenues),” said IDBI Capital in its note on August 14, 2021.

The company is already seeing increase volume growth from ticketing segment in the last 2 months, said the brokerage which remained confident of FY22 EBITDA and EPS surpassing FY20 levels. It expects catering business to start contributing more meaningfully. IDBI Capital had maintained buy call on the stock, after June quarter earnings, with a target of Rs 3,104.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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