IRCTC shares beat one-year returns in three months; buy, sell or hold?

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) have risen nearly 11% in the last three months, giving hopes to investors who intend to book profit after a long wait-and-watch approach. The IRCTC stock, which stood at Rs 569.85 on April 6 this year ended at Rs 630.30 in the previous session, delivering 10.66% returns to investors during the period.  In comparison, the 30-stock Sensex has rallied 9.10% in three months.   

Interestingly, the three-month returns from the railway stock exceed the 8.24% rise the scrip clocked during the last one year. However, the IRCTC stock has lost 1.41% in 2023.   

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In the last trading session, the stock of the tourism and ticketing arm of Indian Railways closed 0.30 per cent lower at Rs 630.30 against the previous close of Rs 632.20 on BSE. Total 0.37 lakh shares of the firm changed hands amounting to a turnover of Rs 2.34 crore on BSE. Market cap of IRCTC stood at Rs 50,424 crore.   

IRCTC stock fell 1.88% to Rs 617.05 in early deals on BSE today. Market cap of the firm fell to Rs 49,476 crore. 

In terms of technicals, the relative strength index (RSI) of IRCTC stands at 45.2, signaling it's neither trading in the oversold nor in the overbought territory. IRCTC stock has a one-year beta of 1. This signals the stock witnessed average volatility during the period. The large cap stock is trading higher than the 100 day but lower than 5 day, 20 day, 50 day and 200 day moving averages.  

IRCTC stock has a price to equity ratio of 50.13, which is higher compared to the industry PE of 48.57. However, the stock has been an outperformer in three years surging 125.65% during the period.   

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 Analysts have mixed views on the outlook of the railway stock.  

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, "The stock has fizzled out from  Rs 675 zone and currently has again breached below the important support zone of Rs 625 levels, weakening the bias and can expect for further fall with Rs 600 levels visible as the next significant support zone for the stock. For the bias to improve overall, it needs to cross above the Rs 635-638 levels to expect for the trend to stabilise and anticipate for further rise."

Vaibhav Kaushik, Research Analyst, GCL Broking said, “The stock is under pressure today following the announcement of a new policy in railway ticketing policy. However, the stock has good support at Rs 590, therefore buying on dips is advise  with stop loss of Rs 585 for a target of Rs 650.” 

Ritu Singh, senior research analyst, Drsfinvest said, “IRCTC’s monopoly in its online train ticket booking business is expected to be challenged after the entrance of Adani Enterprises. The stock is expected to fall further and continue its selling spree to touch the levels of Rs 590 in the near term.” 

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Gaurav Bissa, VP, InCred Equities said, “IRCTC has been an underperformer throughout the upside seen in the benchmark as well as broader market indices. The stock gave a false breakout earlier at Rs 655 levels and since then it has been trading with a weak bias. The stock is now trading below triangle breakdown area and has fallen after retesting a swing low breakdown which implies the trend remains weak with follow up selling evident in the stock. The stock is currently forming a bearish flag pattern on the daily charts indicating a fall till Rs 600 levels can be seen in the coming days." 

Abhijeet from Tips2trades said,"IRCTC is sideways to bearish and has strong resistance at Rs 640 on the Daily charts. A daily close below the support of Rs 619 could lead to a lower target of Rs 578 in the near term." 

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IRCTC logged a 30% rise in net profit to Rs 279 crore for the quarter ended March 31,2023 against Rs 214 crore in the year-ago period. IRCTC’s revenue climbed 40% to Rs 965 crore in Q4 as compared to Rs 691 crore in Q4FY22. The company announced final dividend of Rs 2 per equity share of face value of Rs 2 for FY23, whose entire paid-up share capital will be Rs 160 crore.

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