IRCTC share price saw renewed interest in early trade today amid higher opening on Sensex and Nifty buoyed by prospects of a review in the existing structure of long term capital gains (LTCG) tax, Securities Transaction Tax (STT) and Dividend Distribution Tax (DDT). IRCTC share price rose over 3% to Rs 915.25 compared to the previous close of Rs 883.45 on BSE.
On NSE , the stock rose 3.96% to Rs 918.10 compared to the previous close of Rs 883.10. IRCTC share, which made the most successful stock market debut for a PSU firm ever on October 14, rose to an intra day high of Rs 915.25 on BSE.
At 10:17 am, 1.42 lakh shares changed hands amounting to turnover of Rs 12.82 crore on BSE.
Market capitalisation of IRCTC stock rose to Rs 14,673 crore. On Tuesday, the stock closed 2.64% lower at Rs 883.45 compared to the previous close of Rs 907. On October 24, the PSU stock hit its all-time high of Rs 953.65 on BSE.
The stock closed above Rs 900 for first time on October 23 ending at Rs 900.4. In next session, the stock closed marginally higher at Rs 901.45. Since then, the stock has seen profit booking and value buying with the stock clocking maximum close of Rs 907.5 on October 27, 2019.
However, IRCTC share listing has become a dream come true for investors of the PSU initial public offer (IPO) issue. On October 25, the stock hit its all-time high of Rs 953.65 clocking 198% gains in just 18 days after allotment on October 9 and October 10.
The Indian Railway firm made its market debut on October 14 with IRCTC share listing at Rs 644 on BSE and Rs 626 on NSE against the issue price of Rs 320.
Against the listing price of Rs 644, the IRCTC stock made an intraday high of Rs 743.80 on both the bourses, with 15.50% intraday gain clocked on the BSE, and 18.80% hike against the listing price on NSE.
The stock has been on an upward trajectory since then. From the issue price of Rs 320 per share, the stock moved to an intra day high of Rs 953.65 on Friday (October 25) translating into 198% return for investors on BSE. The stock delivered a 52.31% return to the listing price of Rs 644 on that day.
On NSE too, the stock hit an all-time high of Rs 953.50 delivering 197% return compared to the issue price of Rs 320. The stock has given a 52.31% return on the listing price of Rs 626. Market capitalisation of IRCTC share hit Rs 15,000 crore on Friday compared to Rs 10,736 crore on the listing day.
Rahul Agarwal, Director at Wealth Discovery/EZ Wealth said, "As on today, the stock has already gained 184 percent from its listing price. At a current price of Rs 910, it is trading at a P/E multiple of 53.53 times to its FY19 EPS.
Along with the monopoly business which include catering, online ticketing and packaged drinking water, and other services such as non-railway catering, e-catering, executive lounges and budget hotels, there are a few other earning triggers that will play out in the next couple of years for IRCTC.
The online ticket booking charges which were removed in 2016 have been brought back by the Ministry of Railways from September 1, 2019. Now IRCTC it will charge a rate of Rs 15 for Non-AC and Rs 30 for AC ticket without any revenue sharing with the ministry, unlike earlier. We see significant revenue and margin traction in second half of FY19 and first half of FY20 due to these changes.
IRCTC is a unique business with no comparable peers, and little risk to earnings unless there is a change in policy.
Based on parameters such as strong earnings profile, diversified business segments, healthy return ratios, debt-free status and monopoly business we are bullish on this stock in the long-term, but considering the recent rally, the upside is limited for short-term. For investors, our advice is to continue holding the stock. For investors who are trying to get in, it would be better to wait and enter if and when the stock sees some meaningful correction."
The IPO received bids for 225.39 crore shares compared to the issue size of 2.01 crore shares. The public issue was a part of the government's divestment programme for the financial year 2019-20.
The government which owned 100% in IRCTC sold 12.6% stake in the firm. After the IPO, government's stake in the firm fell to 87.4%. The issue involves sale of 2.01 crore equity shares of face value of Rs 10 each in a price band of Rs 315 to Rs 320. The attractiveness of the firm's business can be gauged from the fact that IRCTC enjoys monopoly across its area of operations and is backed by the government.
By Aseem Thapliyal