IRCTC share listing: Should you sell or hold the stock after making 100% profit?

The successful applicants of Indian Railway Catering and Tourism Corporation (IRCTC) initial public offer (IPO) are sitting on a profit of over 100% over its issue price. The subsidiary of Indian Railways made its stock market debut with 101.25% listing gains on BSE. IRCTC share listed at Rs 644 compared to its issue price of Rs 320.

On NSE, the PSU share listed at Rs 626, rising nearly 100% over its issue price. Bringing more good news to its investors, IRCTC share price climbed 15.49% over its listing price to Rs 743.80 on BSE. On NSE too, IRCTC share price rallied 18.81% to Rs 743.80. With investors already making more than 100 per cent profit, BusinessToday.In talked to analysts to find out whether it is the right time to sell or hold the stock.

Also read: IRCTC share delivers more than 100% returns on market debut, lists at Rs 644 on BSE

Mustafa Nadeem, CEO at  Epic Research said, "If you are a short-term investor, a 120% return is something really good in a single day. It may be best of the returns we have witnessed in listing gains of recent IPOs. So if time horizon or view was for listing gains, one should book at least half to 70% profit and rest can be trailed with stop loss like cost plus 50% of the gains.

On the other hand, any investor who is a long-term player should definitely hold this stock. This is a very unique business model in India that is listed and also very robust numbers in its balance sheet for the last three years. So for long term, it's a definite hold while listing gain traders should book 70% and trail rest with stop loss."

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. The IPO was subscribed nearly 111.80 times on the last day of bidding. The IPO received bids for 225.39 crore shares compared to the issue size of 2.01 crore shares.

The allotment of shares for the initial public offer (IPO) of Indian Railway Catering and Tourism Corporation (IRCTC) was held from October 9 to October 10.

Also read: IRCTC IPO subscribed 81% on Day 1; brokerages bullish on Rs 645-crore issue

Alankit Assignments, the registrar of the IRCTC IPO, conducted the process of share allotment and refund processing.

Arafat Saiyed, Research Analyst at Reliance Securities has a hold recommendation on the stock. He cites the firm's healthy balance sheet and monopoly for long-term view in the stock.

"The IPO was subscribed by 112 times making it the most successful IPO by a PSU and also the most successful IPO in last 18 months. IRCTC operates one of the most transacted websites in the APAC region with an average monthly transaction volume of 25-28 mn. Indian Railway has restored convenience for e-ticket from September 19, which was discontinued for some time. With an average monthly 25 mn ticket booking, this is likely to generate additional annual revenue of Rs 450 crore.

IRCTC is sole licence holder for catering and online ticketing for the Indian Railways. It is exclusively authorised to manufacture and supply packaged drinking water at stations/trains.

IRCTC is in a steady business model, which is likely to grow at 12-15% in the next few years. The company has a healthy balance sheet with over Rs 1,100 crore in cash to support capex. IRCTC has good dividend pay-out track record, as it paid 50% average payout in the last 3 years."

Edited by Aseem Thapliyal