Indian Railway Catering and Tourism Corporation (IRCTC) is a subsidiary of the Indian Railways that handles the catering, tourism and online ticketing operations of the latter, with around 5,50,000 to 6,00,000 bookings every day.
IRCTC held an Initial Public Offering (IPO) on the National Stock Exchange (NSE) on 30 September 2019, the IPO got oversubscription of 112 times.
The base price of shares was set between ₹315 and ₹320 (US$4.60) per share for the IPO. When the listing went live on 14 October 2019, the share price opened at a ₹625 and ₹646 on NSE and BSE respectively and rose massively from there. The IPO has reduced Indian Railway’s shareholding in the company to 87.40%.
As IRCTC holds a monopoly business in E-Ticketing and Railway catering, Investors are quite optimistic about its performance. The financial report for 2019-20 is here:
IRCTC reported a 79.3% jump in its net Profit for the quarter ending 31 March 2020, but it took a hit with the lockdown that was imposed in March.
It reported net Profit of ₹150.6 crores as against ₹84 crores in the year-ago period.
However, on consecutive terms, the company saw a 26.6% dip in net Profit, which might be attributed to the coronavirus-induced lockdown imposed by the Centre in the last week of March. In December quarter, IRCTC had reported net Profit of ₹206 crores.
IRCTC’s revenue from operations during the quarter increased by almost 18% to ₹587 crore as compared to ₹498 crores in March 2019.
The company also announced a dividend of ₹2.50 per share.
When looked on a sequential basis, the impact of lockdown in March has affected almost every segment of IRCTC’s operations.
The catering revenue decreased 12% to ₹236 crores in March 2020 as against ₹269 crores in December 2019.
The revenue from the sales of its bottled water brand Rail Neer took a 13% dip at ₹51 crores as against ₹58.6 crores a quarter ago.
IRCTC’s revenue from internet ticketing dropped 15% to ₹194 crores as compared to ₹227 crores in December 2019.
However, the revenue from tourism increased 7% to ₹102 crores as against ₹95 crores in December 2019.
Author’s analysis of IRCTC’s result
IRCTC stock was on an evident upsurge before lockdown. Its monopoly business, Ownership over 2 Tejas trains and also bidding into new private trains was the critical factor for its massive upsurge. Since April IRCTC stock is moving sideways, as Indian Railways have halted its Trains and IRCTC’s revenue is deeply affected.
On the charts, we can see that IRCTC is confined into a triangle pattern. The positive results can lead to an upwards breakout as of now.
I suggest buying an IRCTC near 1549
Stop loss at 1476;
Target price of 1971.
If call successful, Profit of 27.26% and if fails a minor loss of 4.47%.
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