Miniratna Dividend: After IRFC, Is Railway Stock IRCTC The Next Multibagger In Making? A Technical View!

Railway stocks have majorly bolstered in 2023, and among the star performers will be IRFC shares which are below Rs 100 and have given triple-digit returns in the year so far. However, another railway stock is gaining momentum and that would be IRCTC which is currently trading near its 52-week levels. IRCTC has in recent times recorded a massive upside and bounced from its breakpoints. There is a potential for IRCTC to become the next multibagger like IRFC.

On BSE, IRCTC shares ended at Rs 761.85 apiece, up by 1.64%. The stock is near its 52-week high of Rs 769.90 apiece. Currently, IRCTC's market cap is at Rs 60,948 crore.

As per the Simply Wall Street report, some great changes have been noticed in IRCTC. The report specifically pointed to Return On Capital Employed (ROCE).

According to Motilal Oswal's report, ROCE reflects a financial ratio used to evaluate a company's capital efficiency and profitability. In other words, if you know ROCE meaning, you can use this to figure out a ratio which helps to grasp how well any organisation is yielding profits out of its capital used. ROCE is one of many ratios to understand the profitability of any company and is effectively used by stakeholders, managers, and future investors while analysing any company for investment.

The formula of ROCE is Earnings before interest and tax (EBIT) divided by Capital Employed (Total assets - current liabilities).

Currently, Indian Railways ROCE is at 56.74%. This is good compared to ROCE of other railway stocks like Titagarh Rail Systems at 16.82%, Rail Vikas Nigam at 17.22%, IRFC at 5.32%, IRCON Internation at 12.95%, and BEML at 8.07%, as per ICICI Direct data.

Furthermore, Simply Wall Street pointed out that IRCTC is also displaying some positive trends. Apart from this, IRCTC has also reduced its current liabilities to 44% of total assets as of September 30, 2023, which effectively reduces the amount of funding from suppliers or short-term creditors.

Also, as per Trendlyne data, the consensus recommendation from 8 analysts for Indian Railway Catering & Tourism Corporation Ltd. is HOLD. EPS is expected to grow by 17.7% in FY24. It highlighted that IRCTC's revenue was higher than the average estimate 2 times in past 3 years. Further, the stock's weekly average delivery volume is 33.76%, and it is trading above 8 out of 8 SMAs, and above 6 out of 9 Oscillators in the bullish zone.

The stock has already surpassed its 50-day SMA of Rs 694 and pivot level of Rs 759.55.

Year-to-date, IRCTC shares zoomed by nearly 19%, while its monthly gain is over 13.5%. It will be keenly watched if IRCTC becomes the next multibagger in the railway stocks basket, especially compared to its peer IRFC which has seen tremendous growth in 2023. IRFC has rallied by 150% YTD.

Among other key benefits of IRCTC is that the stock pays hefty dividends to its shareholders. IRCTC shares turned ex-dividend last month for an interim dividend of Rs 2.50 per share on a face value of Rs 2 each for FY24. In percentage terms, the dividend payout was 125% and in value terms will be to the tune of Rs 160 crore.

In Q2FY24, Miniratna reported the highest-ever net profit in its history to Rs 294.67 crore, marking an increase of 30.36% from Rs 226.03 crore in Q2 of FY 2022-23. The PSU registered a strong financial performance with an increase in total revenue of 23.51% which stood at Rs 995.31 crores in the September Quarter of FY 2023-24 in comparison to Rs 805.80 crores in Q2 of FY 2022-23. Both EBITDA and PAT ended up at healthy margins of 28.54% and 30.36% respectively.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.