The e-ticketing arm of the behemoth Indian Railways, IRCTC in both the pre and post-listing saw stellar returns for its investors. The Rs. 645 crore IPO was subscribed 112 times and listed on October 14. And analysts expect the stock to return a massive 100% return in a 1-2 year period. At the close of November 29,2019, the stock quoted at Rs. 897.10 per share on the BSE.
Analyst suggests a buy on correction strategy for the stock
In a span of less than 2 months since its listing, the stock of IRCTC trebled in price in comparison to the issue price. There is expected a further surge in price but before that there is anticipated some profit booking in the counter. And post it, there shall be correction up to the extent of 10% in the stock price of IRCTC ( if the stock breaks its immediate support of Rs. 850).
Here at this juncture there is a probability that the stock reaches a price between Rs. 750 -Rs. 800 per month. And investors at this price level can take a buy call on the stock with an investment horizon of 1-2 years to make up to or more than 100% return.
Positives of the stock
1. Only company with an authorization by the Indian railways to offer e-ticketing, catering services as well as packaged drinking water.
2. The company has recently went ahead in running private trains with Tejas Express in its network and the train in its very first month of operation has been reported to main phenomenal profit.
3. Increasing earnings through the recent levy of service charge of Rs. 15 on booking non-AC tickets and Rs. 30 on air-conditioned tickets.
4. The company has even diversified into non-railway catering and services such as e-catering, executive lounges and budget hotels.
5. Also, the vendor company enjoys the monopoly status and can be compared to MakeMyTrip like companies. Furthermore the company is debt-free.
Another view that defies the run up in IRCTC stock
Analysts said IRCTC's higher valuation is due to the fact that investors are comparing the stock to an e-commerce one. A reversal in this bullish momentum may be on the cards for the stock as it has run up "too much, too fast", according to some market participants.