Indian railway catering and tourism corporation stock recommendation

 

The current share price of IRCTC is Rs.763.90 (The IRCTC share price was 692 when I posted this content on Sept 19, 2022. The stock given a profit of 10 percent in 2 weeks and was really a trending stock)

 

Industry	Sector
Commercial services & Supplies	Industrials

Business Overview

Indian railways Mini Ratna (Category-I) Central Public Sector company,  IRCTC falls under the Ministry of Indian Railways . IRCTC was established on September 27th, 1999 as an extension of the Indian Railways to improve, professionalize, and manage the railway catering and hospitality services at stations, on trains, and other locations, as well as to promote domestic and foreign railway tourism through the creation of low-cost accommodations, unique tour packages, marketing and advertising campaigns, and international reservation systems.

Fundamentals

Financial ratios and statements

• IRCTC stock has a market value of 55,250 Cr.
• IRCTC's 52-week high and low prices are Rs. 128.26 and Rs. 557, respectively.
• The entire standalone revenue as of June 2022 is Rs. 852.59 crore, a 23% increase from the value of Rs. 690.96 crore as of March 2022.
• IRCTC's P/E ratio is 68.17, which seems a little high.
• The ROE and ROCE figures are respectively 53.93% and 39.75%. The corporation generates higher revenue on investments made, which is indicated by the ROE and ROCE numbers.
• Compared to 304.47 crores in March 2022, the operational profit was 345.36 crores as of June 2022.
• With an operating profit margin of 50.74%, the business makes half as much money as it does in total revenue. The reported earnings per share are Rs. 8.30.
• The company achieved an operational profit of 881 crores in FY 2021–2022—a figure that is 368% greater than the operating profit of 188 crores in FY 21—and earned an after-tax profit of 664 crores.
• Operational activities create the majority of the company's income. IRCTC had a positive cash flow of 23 crores in FY22, a significant improvement over the -252 crores of FY21.

Technical analysis

As on Nov 9, 2022 (Post updated)

The technical chart analysis of IRTC has done 2 weeks ago and predicted that this railway stock is trending of that week. Now the stock price had went to 763 level and the further analysis of IRCTC share price chart today is given below.

 

The stock is not at a resistance level of 790 and the Anchored VWAP indicator is showing a buy signal on IRCTC. The stock price has made a crossover on Anchored VWAP line and the signal line is now acting as a support for the price. The stock price has also break the reverse trend line. If the stock price crosses above the resistance level of Rs. 790 , then a buy order can be taken for a position trading with a target of Rs 1000 with a stop-loss at 690 ( A risk reward ratio of 1:2).

The previous IRCTC stock analysis as on Sept 19, 2022

The IRCTC's 2 hour chart is depicted in the above graphic. IRCTC at a price greater than 600 indicates a buy signal.The moving average cross over appears to be convergent while moving over 690. At the price level of 692.5, a horizontal line is drawn, acting as a solid support for the price. In the following trading session, the stock price may reverse positively at this point, which would be a favorable development. There was a significant volume change after the moving average crossed over and the MACD indicated a neutral trend. Moving averages, trend oscillators, volume, and volatility provide a buy signal for IRCTC over the weekly range.

Recent news on IRCTC

The Indian Railway Catering and Tourism Corporation is costing the government money due to its failure to provide customers with invoices for the food it sells inside trains. Ajay Jagga, a tax expert based in Chandigarh, wrote to Union Finance Minister Nirmala Sitharaman to inform her that the Supreme Court had sent notices to the Central government in response to a request to close gaps in the GST system.

Indian Railways is back with yet another service that would improve the comfort of railway service. The Indian Railways has made the decision to start providing bedroll services to passengers in third-class economy AC trains. Beginning on September 20, 2022, the railway authorities will begin offering bedroll services to clients.

Other important ratios and values

• Intrinsic value - Rs.202 , which indicates that the stock is trading 3 times higher than its valuation.
• Dividend yield - 0.51%, which is not considered to be a good value compared to other stocks. 
  

Pros

• The business is practically debt free.
• A high return on equity (ROE) track record has been demonstrated by the company, which has produced good profit growth of 23.8% CAGR over the past five years. Three year ROE : 31.6 %.
• The company has consistently paid out a strong 41.3% dividend.  

Cons 

• The stock price is 29.4 times the book value.

Conclusion

From the analysis mentioned above, it can be inferred that IRCTC is a viable option for a long-term investment under specific circumstances. Stock has performed well over the past week and is thought to be an excellent short-term investment.

Read : Long term Investing options - Hinduja Global Solutions Ltd - Leading with resilience.

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