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IRCTC share turned Rs 1 lakh into Rs 61,000 in 10 sessions; what lies ahead?

Share price of IRCTC has lost 38% from its all-time high of Rs 1,995 hit on February 25, 2020. Rs 1 lakh infused into IRCTC stock on February 25 would have turned to Rs 61,463 today

Aseem Thapliyal | March 13, 2020 | Updated 11:26 IST
IRCTC share: Market's bullet train in reverse gear for 10 sessions, what lies ahead?
Share price of IRCTC which hit an intra day low of Rs 1,226 against previous close of Rs 1,290 looks set to end in the red today when the market is trading in green

The bullet train of stock market has been operating in reverse gear for the last 10 trading sessions. IRCTC stock, which was once a hot favourite to hit the historical Rs 2,000 mark, is trading around Rs 1,290 level today.  Share price of IRCTC, an arm of Indian Railways, has lost 38% from its all-time high of Rs 1,995 hit on February 25 this year. Rs 1 lakh infused into IRCTC stock on February 25 would have turned to Rs 61,463 today.

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The large cap stock, which logged a market capitalisation of over Rs 30,000 crore, has fallen to Rs 20,000 crore, thanks to the jitters from coronavirus to Sensex and Nifty in last one month. The stock which hit an intra day low of Rs 1,226 against previous close of Rs 1,290 looks set to end in the red today when the market is trading in green. The downfall in 10 days and today's weak performance is likely to cast doubts over the strength of the stock. But Santosh Meena, senior analyst from TradingBells is of different opinion.

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Meena says, "IRCTC which was heading one way toward upside has corrected significantly from its high. The main reason for this fall was the rising number of new cases of coronavirus in India because the number of people who travel may come down significantly due to the risk of Coronavirus. There is no fundamental problem with this counter while it is a temporary issue and this correction is a good buying opportunity for the investors.

Technically,  Rs 1,200-1,300 zone is a strong demand zone and we can expect a pullback from here. If it slips below Rs 1,200 level then  Rs 1,030- Rs 950 will be another strong support zone to buy it. In the upside, Rs 1,600-1,700 zone will act as an immediate resistance area."

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It seems, the stock's rise has been stemmed by fears of coronavirus on Dalal  Street.

Before the slide, it outperformed the leaders across most sectors in the stock market.

The stock rose 203% until February 25, 2020 compared to its listing price of Rs 644. On October 14 last year, the Indian Railways firm made its stock market debut with IRCTC share listing at Rs 644 on BSE and Rs 626 on NSE. It delivered 511% returns compared to IPO issue price of Rs 320.

Bids for IRCTC shares were invited in a price band of Rs 315 to Rs 320 during the IPO held from September 30 to October 3. The issue involved sale of 2.01 crore equity shares of face value of Rs 10 each in a price band of Rs 315 to Rs 320.

Analysts have been bullish on the prospects of the stock since the firm logged stellar performance in terms of earnings. The ticketing arm of IRCTC reported a 179% rise in net profit at Rs 205.80 crore for the third quarter ended December 31, 2019, against a net profit of Rs 73.59 crore in the corresponding quarter of last fiscal on February 12 this year. On a sequential basis, profit grew 106.17% from Rs 99.82 crore in the September quarter of this fiscal.

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An announcement by FM Nirmala Sitharaman in  Union Budget that India would get more trains like Tejas also led to positive sentiment around the stock. Healthy cash on books and the recent announcement of interim dividend of Rs 10 also helped the stock hit its all-time high on February 25.

IRCTC share price has doubled in 1.5 months, here's why

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