Should you buy IRCTC shares now? Shares of Indian Railway Catering and Tourism Corporation Limited (IRCTC) have gained nearly 10 per cent in the last 5 trading sessions and have gained 82 per cent in the one-year period. However, in the last three-and-a-half months, the stock has lost 18 per cent as against a 5 per cent fall. nifty During this period. IRCTC stock is trading higher than the 5-day and 20-day moving averages but lower than the 50-day, 100-day and 200-day moving averages.
IRCTC’s net profit more than doubled to Rs 214 crore during the January-March period as against Rs 104 crore in the same period last year. The catering and tourism arm of Indian Railways reported a 103 per cent growth in revenue from operations at Rs 691 crore in the fourth quarter as against Rs 339 crore year-on-year (YoY).
While IRCTC’s top-line was ahead of consensus estimates on account of a strong beat on the catering front amid the resumption of cooked meal services, the EBITDA margin at 40 per cent was below estimates as the Rail Neer business hit one-time. The reason EBIT loss was reported. 271 million charge.
Market experts are of the opinion that the current financial year (FY23) could prove to be an exceptional year for the sector as the travel and tourism sector is coming back on track after being hit by the pandemic. He added that with the market rallying, investors can consider adding stocks on a correction.
Analysts further said a costly stock like IRCTC is particularly vulnerable in the current environment where risk-averse trading triggered by the global fight against inflation is sucking the foam in all risky assets. However, a deeper correction could provide an entry opportunity for investors as the prospects of IRCTC look exciting in the days to come.
Brokerage Prabhudas Lilladher has maintained its hold rating on Indian Railway Catering and Tourism Corporation (IRCTC) shares with a DCF based target price of Rs 648.
“Despite a beat on the revenue front, our FY23E/FY24E EPS estimates remain largely intact as we have already accounted for the positivity arising out of Rail Neer expansion and catering price hike. The recommendation for reversal in 2S seating class to unreserved category is also baked into our assumptions, as announced in March,” the note said.
Revenue from operations grew 104 per cent to Rs 691 crore in the March quarter, from Rs 339 crore in the corresponding quarter of the previous fiscal.
Indian Railway Catering and Tourism Corporation said that the company’s business activities are gradually coming back on track with the lifting of restrictions imposed by the state and central governments. IRCTC’s EBITDA stood at Rs 303.14 crore in March 2022, an increase of 84.22 per cent from Rs 164.55 crore in March 2021. Its EPS fell to Rs 2.67 in March 2022 from Rs 6.49 in March 2021.
IDBI Capital in its note said: “Indian Railway Catering and Tourism Corporation (IRCTC) continued to register strong revenue growth on account of easing of COVID restrictions. There was some decline in profitability due to increase in catering revenue and loss in Rail Neer. In the long term, the company will benefit from increased license earnings in catering as it returns to pre-Covid levels. ,
Also, with the increasing acceptance of online ticket booking, we expect internet ticketing to continue to be strong. Apart from this, Rail Neer and tourism are also expected to improve due to easing of COVID restrictions and increase in travel. The company’s focus on e-catering initiatives and increasing revenue from advertising and license fees augurs well for the company’s long-term profitability. Hence, we maintain our BUY rating with a target price of Rs 804/share (PE of 61x on FY24E EPS), further mentioned in the note.
The views and investment suggestions of experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decision.
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