NEW DELHI: It has been a little over two years since the Indian Railway Catering and Transportation Corporation (IRCTC) became a publically listed company and during this period, its stock has given a return of over 17-times.
After a slow growth in its value last year when much of railway transportation was disrupted by Covid-19-led lockdown, IRCTC shares have again started rallying at a fast pace. In CY21, the stock has grown by nearly 313% and since the company had announced their stock-split plan in the ratio 1:5 late July, the shares have gone up by 156%. In the last one month alone, it has given a return of over 60% and on Monday it surged over 9% to close at `5,964 apiece on the NSE.
When asked what is pushing the stock to new highs almost every session, Vinit Bolinjkar, Head of Research of Ventura Securities said that the stock has gone up due to various reasons. “Given that the Indian railways is an extremely significant mode of passenger transport, the increasing number of vaccinated people along with the economy repopulating has resulted in normalised train operations…The company has increased its presence across verticals be it cruises or bus ticketing service, apart from its core business of train ticket services and catering,” said Bolinjkar.
He added, “The railway routes connecting the four metro cities (which account for 52% of passenger traffic) are expected to decongest once the Dedicated Freight Corridor project is completed providing opportunity to increase capacity of passenger trains and thus lead to growth in passenger traffic which will benefit IRCTC in all its business segments.”
Another analyst puts out that IRCTC’s monopoly position in two out of its four operating segments, namely internet ticketing and Rail Neer, makes it a force to reckon with in the market. He feels that many investors’ feel IRCTC is undervalued when compared to recently listed Zomato. “Given IRCTC’s dominance in the digital space and it being a highly profitable firm in normal circumstances, it has become a favourite among retail investors,” he said requesting anonymity. Bolinjkar says the exponential rise in the stock has made it seem expensive in terms of valuation. IRCTC is trading at 153.21x FY22 earnings.