Is it a good time to buy IRCTC shares?

Indian Railway Catering and Tourism Corporation(IRCTC) is a monopoly company having the sole right to facilitate online ticket bookings for Indian Railways. It is also the primary agency serving food and water to travellers in trains and stations. The company also aims to promote domestic and international tourism by developing budget hotels, unique tour packages, information & commercial publicity, and global reservation systems.

The company listed its shares on bourses in 2019 and has made much money for its shareholders. The appreciation in share price since listing has been thanks to its monopoly business and gradual rise in profits. Even as its business took a hit during the pandemic as Indian Railways suspended its operations, the attraction for IRCTC share remains. 

IRCTC shares Prices 2022:

However, lately, the stock has come under some selling pressure. As of early November 2022, the stock is down 10% year to date (YTD) and 8% in the last year. So, does this dip mean investors have an opportunity to accumulate IRCTC share price? The answer is very likely yes. They believe that even as short term problems may be discouraging, there are enough drivers for the stock to appreciate in the long term. 

Analysts believe in the longer term, the company will benefit from increased license income in catering as traffic returns to pre Covid-19 levels. Moreover, internet ticketing is also likely to gain more traction, making ticketing revenue higher. Tourism revenue is also expected to improve, led by increased travelling, as the pandemic is all but over in India thanks to rapid vaccination. 

The company is also focused on e-catering initiatives. Thus, increasing revenues from advertisement bode well for an increase in profitability. A SWOT analysis done by ICICIdirect also shows a positive outlook. It counts seven strong points for IRCTC while three opportunities. It counts just one weakness and no threats. 

Strengths include:

– IRCTC is a company with low debt

– Increasing revenue every quarter for the past four quarters

– Increasing profits every quarter for the past four quarters

– Book value, which is all assets fewer liabilities per share, has been improving for the last two years

– IRCTC has zero promoter pledge

– Foreign institutional investors have been increasing their shareholding

– Strong momentum in the stock price as it trades above short-, medium- and long-term moving averages

Most of the opportunities that ICICIdirect counts are short-term:

– Technical indicator Relative Strength Index indicates a price strength

– Its share price is rising on higher volumes, which is a positive sign

The broker counted a single weakness: selling shares by mutual fund managers in the outdated quarter, which shows they are becoming bearish on the stock. 

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