This stock has ₹generated massive returns for its investors in 2 years since its market debut, surging nearly 1900 percent from its issue price. Were you a part of this rally?
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The Indian Railway Catering and Transportation Corporation (IRCTC) stock recently celebrated 2 years of listing on the stock exchanges. The performance of IRCTC has been quite stellar so far. Listed in October 2019, the stock has given tremendous returns to its investors in this short period.
The stock hit its new 52-week high of ₹6,375.45 on the BSE on October 19, 2021. As against its issue price of ₹320 during the IPO, it has given a whopping return of 1,892 percent to its investors in a span of 2 years.
If you had invested ₹15,000 during the IPO of IRCTC in October 2019, it would have turned to ₹2.98 lakh today. The IPO was open for subscription between September 30 - October 1, 2019, and was subscribed 112 times in these 3 days.
It was also one of the few stocks that had listed at an over 100 percent premium at ₹644 against its issue price of ₹320. Even if you had bought the stock post it listing at ₹644, it would have generated nearly 900 percent returns to date. This means an investment of ₹1,00,000 on IRCTC on its listing day would turn to nearly ₹10 lakh today, rising 10 fold in 24 months.
The stock has been a favorite amongst analysts and investors alike. Most experts have a bullish view of the stock and see a potential of a further rise even after the massive returns generated since its debut in the past 2 years.
IRCTC has jumped over 8 percent intraday today, crossing the market capitalisation of ₹1 lakh crore for the first time ever. The stock has surged nearly 300 percent in the last 6 months and over 100 percent in the past 3 months.
The recent surge in IRCTC's share price comes on the back of its stock split announcement. The board of IRCTC approved a stock split in the ratio of 1:5 on August 12. The record date for the same has been fixed for October 29, 2021.
As the name suggests, stock split means splitting a single stock into 2 or more stocks. No additional shares get issued in a stock split but existing shares get multiplied. In the case of IRCTC, 1 stock will be divided into 5 stocks. It increases the liquidity of the stock by decreasing its stock price, thus making it more affordable for investors.
Along with the stock split announcement, an increase in railway bookings as the economy opens up and more people looking to travel on the back of vaccination drives and decrease in COVID cases have proven to be very positive for the stock.
IRCTC is in a pure monopoly business as it is the only authorized firm to provide online tickets and catering services to the Indian railways. This along with its robust financials as well as a debt-free status had made it a favorite among all kinds of investors.
In the September 2021 quarter, the retail holding in the stock jumped 291 bps to 14.17 percent. The mutual funds hold 4.78 percent of the stock while FPIs have a 7.81 percent stake in IRCTC as per the end of the September quarter.
In the June 2021 quarter, the railways catering company posted a net profit of ₹82.52 crore as against a net loss of ₹24.60 crore in the corresponding quarter last year.
Its revenue from operations surges 85.4 percent YoY to ₹243.4 crore and earnings before interest, taxes, depreciation and amortization (EBITDA) came in at ₹111.5 crore in Q1FY22. It had posted an EBITDA loss of ₹43.9 crore in the year-ago period.
What lies ahead?
Going ahead, the expansion plans of the firm showcases the further potential of an upside. The company has been expanding its business to bus, air tickets as well as tour and travel planners. This could open up a whole new potential opportunity for the firm to strengthen its position. Further, the firm is also looking to apply for a payment aggregator license from the RBI, which will not only make it easier for customers but also bring in additional revenue.
Further, the easing of the economic condition post the pandemic and more people willing to travel will continue to be a positive for the firm.
IRCTC is the only entity authorized by the Indian Railways to provide catering services to railways, online railway tickets, and packaged drinking water at railway stations and trains in India. It has a dominant position in online rail bookings and packaged drinking water with around 73 percent and 45 percent market share, respectively.
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