IRCTC Share Price: Prabhudas Lilladher says IRCTC is a perfect play on the unlock theme with gradual relaxations in travel restrictions coming into effect. Indian markets have been buoyed by developments on the COVID-19 vaccine front at home and abroad. IRCTC valuation at 27x FY22E and 24x FY23E looks challenging but will sustain given:
1) Monopoly – Monopolistic nature of the IRCTC business
2) Growth – clear growth traction for IRCTC (20% PAT CAGR over 3 years)
3) Returns – Strong returns ratios & healthy Balance Sheet of IRCTC
IRCTC share price has risen over 120% till date compared to its 52-week low of Rs 774 hit during the market crash in March. However, the stock is still off its 52-week high of Rs 1,995, hit earlier in February.
IRCTC shares are trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. IRCTC stock has gained over 90% in one year and risen 80% since the beginning of this year. Market cap of the company rose to Rs 27200 cr.
Management of IRCTC said that they will restart Tejas Trains when passenger demand resumes, Tejas trains breaks even at 68-69% occupancy. They said that the legal opinion for OFS is being sought and e-Ticket booking has resumed to 4.6 Lk/Day vs 9 Lk/Day pre-Covid.
IDBI Capital says that IRCTC’s business is dependent on Indian Railways and the Covid-19 pandemic has had severe impact on operations of passenger trains. While they expect passenger trains to attain normalized operations in FY22, consumer confidence to resume travel might take time.
IRCTC, a public sector undertaking (PSU) of the Ministry of Railways, is the only entity authorized by the Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India.
The recent encouraging announcement of a breakthrough in the production of a Covid-19 vaccine raises hopes that normalcy should return sooner than later.
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Significant long-term opportunity for IRCTC from private trains operations:
Indian Railways has initiated the process to get participation of private players in operations of 151 passenger trains across 12 clusters. This would provide a strong opportunity for an increase in capacity of passenger trains which in turn would benefit IRCTC across its business segments.