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

IRCTC share price hit all-time high in trade today clocking over 100% rise since the beginning of this year. Share price of Indian Railway Catering and Tourism Corporation (IRCTC), which closed at Rs 933.45 on December 31, 2019 rallied to Rs 1,872.70 on BSE, gaining 939.25 points or 100.62% in 37 trading sessions. Share price of IRCTC has rallied 79.18% in last one month and risen 29.01% in a week. On BSE, IRCTC share price today closed 11.67% or 191.35 points higher at Rs 1,830.65. 

On NSE, IRCTC share price closed  14.06% or 230 points higher at Rs 1,869 comared to the previous close of 1,638.60. Market capitalisation of IRCTC rose to Rs 29,290 crore on BSE today. The large cap stock has gained 20.58% in last two days. IRCTC share price traded higher than its 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

Also read: IRCTC share rises over 11% post Q3 earnings

On January 16 this year, the Indian Railways stock hit Rs 1,000 for the first time ever a day ahead of launch of India's second private train Ahmedabad-Mumbai Central Tejas Express. It's slowly but steadily approaching the key Rs 2,000 mark. The stock price of public sector behemoth has gained 461% over its IPO issue price.

Of late, the firm has delivered stellar performance on the earnings front, which has also helped the stock clock huge gains since listing on bourses.

Also read: IRCTC Q3 profit zooms 179% to Rs 206 crore, revenue up 62%

On February 12 this year, IRCTC reported a 179 per cent rise in net profit at Rs 205.80 crore for the third quarter ended December 31, 2019 against net profit of Rs 73.59 crore in the corresponding quarter of last fiscal. Q3 earnings performance was powered by broad-based growth across all sectors. On a sequential basis, profit grew 106.17 per cent from Rs 99.82 crore in September quarter of this fiscal. A day later, stock price of IRCTC surged over 11% to then all-time high of Rs 1,562 on BSE. Since the announcement of Q3 earnings, the Indian Railways stock has risen 32% till date.

On November 13, 2019, IRCTC reported a 14 per cent year-on-year (YoY) rise in net profit at Rs 172.16 crore for the half-year ended September 30, 2019 helped by sharp rise in revenue from e-ticketing segment. IRCTC's net revenue from operations grew 3.77 per cent to Rs 972.61 crore as against Rs 937.25 crore in the first half of the last fiscal. Since November 13, IRCTC stock has gained 101% on BSE. 

Rahul Agarwal, Director, Wealth Discovery/EZ Wealth said, "Inclusion of the stock into mid-cap space from January 1 (classified by AMFI, as per SEBI norm) gave positive momentum to the stock in New Year. The recent rally that started from pre-budget expectations continued post the budget supported by the Union Budget 2020 announcement on February 1 where Finance Minister Nirmala Sitharaman announced that India will get more Tejas-like trains in the near future.

Also read: Second Tejas train to be launched on Ahemdabad-Mumbai route next year

In addition, the fair trade regulator Competition Commission of India's clean chit on allegations of unfair market practices has also helped the stock. The fact that IRCTC enjoys a monopoly position in providing online ticket booking and catering services for railway passengers and its high revenue visibility from packaged drinking water justify the valuation premiums that are built into the stock. Since its October debut, IRCTC stock has risen nearly five-fold from the IPO price of Rs 320 per share, making it the most successful IPO in recent times."

Also read: Indian Railways hikes food, tea prices on Rajdhani, Shatabdi, Duronto Express; Check new prices

The Indian Railways firm made its stock market debut on October 14 last year with IRCTC share listing at Rs 644 on BSE and Rs 626 on NSE against the issue price of Rs 320.

IRCTC IPO was open for subscription between September 30 and October 4 in 2019. The issue involved sale of 2.01 crore equity shares of face value Rs 10 each in a price band of Rs 315 to Rs 320. The public issue was part of the government's divestment programme for fiscal year 2019-20.

Written by Aseem Thapliyal