IRCTC Share Price: Top Railway Stock To Buy For Strong Gains Of 47%, Target Rs 1,500; Dividend Of 200% Ahead

Indian railway heavyweight stock, IRCTC is set to deliver a massive dividend of 200% to its investors. For FY24 overall, IRCTC will pay up to 325% or Rs 6.5 per share, which will be the highest ever since listing. With the highest ROE of 38.85%, IRCTC stock is an attractive bet for fetching strong gains. To be precise, there is the potential of 47% upside ahead with the highest target being Rs 1,500.

IRCTC Share Price:

IRCTC's share price is currently at Rs 1021.70 apiece with a market cap of Rs 81,736.00 crore. In the trading week that ended on May 31, the stock tumbled by 8.4%, while overall in May 2024 the stock dipped by 3.3%. Nonetheless, YTD, the stock is up by 14.5%.

In a year, IRCTC shares are up by 58%. While its 5-year performance is up by 556%.

As per BSE data, IRCTC has the highest return on equity (ROE) among its peers like IRFC and RVNL, to the tune of 38.85%. While its price-to-equity ratio is at 73.93x. There is potential for further upside in IRCTC.

IRCTC Buy/Hold Recommendation:

Jinesh Joshi, Research Analyst, Prabhudas Lilladher said, "Revenues increased 19.7% YoY to Rs11,548mn (PLe of Rs11,308mn). Revenues from State Teertha /Catering/Rail Neer/Tourism/Internet Ticketing was down 28.1% YoY and up 34.1% YoY/ 13.1% YoY/ 11.6% YoY/ 16.0% YoY to Rs471mn (PLe Rs671mn)/Rs5,308mn (PLe Rs4,959mn)/Rs830mn (PLe Rs951mn)/Rs1,546mn (PLe Rs1,504mn)/ Rs3,424mn (PLe Rs3,223mn) respectively. All the segments were EBIT positive."

Joshi further said, "EBITDA increased 11.7% YoY to Rs3,624mn (PLe Rs3,862mn) with a margin of 31.4% (PLe of 34.2%) as against 33.6%/35.2% in 4QFY23/3QFY24 respectively," adding, "Adjusted PAT stood at Rs2,763mn (PLe of Rs3,066mn) up by 9.2% YoY and with a margin of 23.9% (PLe 27.1%) as against 26.2%/28.1% in 4QFY23/3QFY24 respectively. The exceptional charge of Rs79mn was due to excess provisions written back for previous years relating to various expenses."

On the valuation, Joshi said, "The stock currently trades at 66.1x our FY25E EPS estimate. We currently have a HOLD rating on the stock with a TP of Rs825."

On the other hand, an analyst at Incred Equities has suggested BUY for a target price of Rs 1,500. The brokerage advised investors to hold IRCTC shares with fresh buying recommended around Rs 1,135 levels.

IRCTC Dividend:

The railway giant has announced a Final Dividend of Rs.4/- per share of face value of Rs. 2/- each for the financial year 2023-24 @200% of the paid-up share capital, subject to the approval of shareholders in the forthcoming
Annual General Meeting.

Notably, this final dividend is in addition to an interim dividend payout of Rs 2.50/- per share or @125% of the paid-up share capital declared by the Board of Directors in November 2023 and already paid to the shareholders.

IRCTC Earnings:

In Q4FY24, IRCTC earned a net profit of Rs 284.18 crore, up from Rs 278.79 crore in Q4FY23 but lower than Rs 299.99 crore in Q3FY24. Meanwhile, revenue from operations stood at Rs 1,154.77 crore, registering growth compared to revenue of Rs 965.01 crore in Q4FY23 and Rs 1,118.30 crore in Q3FY24.

FY24 PAT is at Rs 1,111.07 crore, and revenue came in at Rs 4,270.17 crore compared to FY23 PAT and revenue of Rs 1,005.88 crore and Rs 3,541.47 crore.

Broadly, IRCTC's FY24 performance has been healthy.

Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) is a "Mini Ratna (Category-I)" Central Public Sector Enterprise under the Ministry of Railways, Government of India. IRCTC was incorporated on 27th September 1999 as an extended arm of the Indian Railways to upgrade, professionalize and manage the catering and hospitality services at stations, on trains and other locations and to promote domestic and international tourism through the development of budget hotels, special tour packages, information & commercial publicity and global reservation systems.