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IRCTC Rallies 13% On Stellar Q3 Show; Stock Up 400% Over The Issue Price

Shares of IRCTC (Indian Railway Catering & Tourism Corporation) jumped 13% in Thursday’s session after the company posted nearly 3 times jump in December quarter profit.

The company on Wednesday reported a 179.65% year-on-year rise in profit at Rs 205.80 crores for the quarter ended December 31. The figure stood at Rs 73.59 crores in the corresponding quarter last year.

The state-run company said its revenue from operation surged 64.59% to Rs 715.98 crores for the quarter. Tracking the results, the stock jumped 12.55% to hit a high of Rs 1,596.95 on BSE. IRCTC announced a short term dividend of Rs 10 on the face value of Rs 10 per share.

With Thursday’s gains, the scrip has rallied 399% over its issue price of Rs 320 per share but many analysts believe the scrip still is reasonably valued. It got listed on October 14, 2019, on bourses. Yogesh Mehta, Founder at Yield Maximiser said the scrip was undervalued at the time of IPO.

“It has jumped almost 5 times from the IPO price. But IRCTC is into monopolistic business in terms of catering and ticket bookings. It has pricing power. There is no other competition. It has good prospects, with at least a 27-28% growth rate. I believe that even if somebody asks me if 40 times Price/Earnings multiple in IRCTC is reasonable, I will say yes,” said Mehta.

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Prabhudas Lilladher which recently began coverage on the stock said that valuations on the stock look compelling given a likely sales and PAT CAGR of 22.5% and 48.7% over FY19-22 and a monopolistic position in ticket bookings and caterings.

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