19 Oct , 2021 By : Kanchan Joshi
MUMBAI : Indian Railway Catering and Tourism Corporation Ltd (IRCTC) has become the ninth public sector entity to join the elite club of Rs1 trillion market capitalization (m-cap) with its shares surging over 300% so far this year.
The stock hit a record high of Rs6,287.95, gaining as much as 7.1%. At 9.20 am, the scrip was trading at Rs6,283 on the BSE, up 7% with its m-cap at Rs1.01 trillion.
Earlier, PSU stocks such as State Bank of India, Coal India, NMDC Ltd, Indian Oil Corp. Ltd, Power Grid Corp. Ltd, SBI Life Insurance, Bharat Petroleum Corp. and SBI Cards have achieved this milestone.
IRCTC listed on 14 October 2019 on exchanges and its issue price was Rs320 a share. Since then, the stock has surged over 18-fold or 1,737%. So far this year, it has gained 308.1% and so far this month it has advanced 58%.
Analysts said IRCTC is expected to recover in a robust fashion, with covid cases coming under control and the vaccination drive continuing to remain strong as the economy unlocks across India. The impact of the third wave of the pandemic also remains uncertain.
“IRCTC as a company is a pure monopoly business and the recent surge in stock prices is giving great reward to shareholders on the back of unlocking the economy and upcoming festival season which will boost the company’s revenue," said Akhil Rathi, vice president, advisory, at Marwadi Financial Services.
Despite challenges from the second wave, IRCTC delivered strong numbers in June quarter as catering segment revenues improved, rail-neer segment turned EBIT positive after four quarters and internet ticketing segment continues to deliver strong margins.
"Internet ticketing saw a jump in Q1 due to low base last year; we expect this segment will grow substantially higher in the second quarter at about 50% compared with Q1. Also, the number of trains will increase which will increase the revenue for Rail Neer and Catering services" Rathi added.
In the June quarter, the number of tickets booked per day was 63.7 million and this has already improved meaningfully in July and August. Catering segment revenues were higher than estimates which led to a beat on the revenue front. The company is also exploring e-catering options which analysts say should aid the growth of this segment in future.
Ashish Chaturmohta, Director Research, Sanctum Wealth says the rail Neer is a volume game as manufacturing capacity increases coupled with margin expansion as operating leverage plays out. Catering segment will see the benefit of volumes through higher Train Side Vending, e-Catering, Food Plazas, Fast Food Units and Jan Ahaars and benefit of pricing as revised prices (in Circular of 2019) are implemented post-covid.
The revenue from internet ticketing in the quarter Rs149 crores split as Rs104 crore as convenience revenues and Rs45 crore from non-convenience fees. In Rail segment Neer, the present capacity is at 1.48 million litre per day with utilization rate of 32 to 35% in the first quarter.