Monopoly stock with strong fundamentals trading at discount of more than 28%

During Wednesday’s morning trading session, the shares of a public sector undertaking (PSU) that is the official online portal for train ticketing, catering, and tourism services in India slumped nearly 1.4 percent to Rs. 815.05 on BSE. 

Stock Performance: 

With a market cap of Rs. 65,856 crores, at 09:48 a.m., the shares of Indian Railway Catering and Tourism Corporation (IRCTC) Limited were trading in the red at Rs. 824, down by nearly 0.4 percent, as against its previous closing price of Rs. 827. 

The stock hit its 52-week high at Rs. 1,148.3 on 22nd May, and compared to its current trading price of Rs. 824, the stock is trading at a discount of nearly 28 percent. 

The stock has delivered negative returns of nearly 6.2 percent of returns in one year, as well as around 20.2 percent returns in the last six months. So far in 2024, the shares of IRCTC have given negative returns of about 7.6 percent. 

Recent Developments: 

On 12th August, IRCTC and National Capital Region Transport Corporation (NCRTC) signed an MoU to enhance the travel experience for passengers of the RRTS and Indian Railways through the ‘One India – One Ticket’ initiative. 

The partnership was aimed at providing seamless travel solutions to passengers booking online tickets through the IRCTC platform for railways, air travel, or buses, who would now have the added convenience of booking NCRTC QR code-based tickets seamlessly. 

This initiative was intended to make it easier for passengers to book and travel using both the Indian Railways network and the RRTS services. 

Financials: 

IRCTC reported a significant growth in revenue from operations, experiencing a year-on-year increase of nearly 7.4 percent, rising from Rs. 991 crores in Q2 FY24 to Rs. 1,064 crores in Q2 FY25. 

During the same period, the company’s net profit increased from Rs. 295 crores to Rs. 308 crores, representing an increase of around 4.4 percent YoY.

Key Financial Ratios: 

In terms of key financial metrics, IRCTC has a Return on Equity (RoE) of 40.5 percent and a return on capital employed (RoCE) of 53.8 percent. Additionally, the company’s debt-to-equity ratio stands at 0.01, with a Piotroski score of 6. 

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Shareholding Pattern: 

As per the September 2024 shareholding pattern, the Promoters hold a 62.4 percent stake in the company, Foreign Institutional Investors (FII) hold a 7.54 percent stake, while Retail Investors and Domestic Institutional Investors (DII) hold a 13.92 percent and 16.14 percent stake in IRCTC, respectively. 

About the company: 

Established in 1999, Indian Railway Catering and Tourism Corporation Limited (IRCTC) is the only entity authorized by Indian Railways to provide online railway tickets, catering services to railways and packaged drinking water at railway stations and trains across India. 

IRCTC received the status of Mini–Ratna (Category-I Public Sector Enterprise) by the Government of India, on 1st May 2008. 

The primary objective of its incorporation was to modernize and professionalize catering and hospitality services, managing these facilities at railway stations, trains, and other locations. 

Written by Shivani Singh

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