IRCTC share price rises 5% in a weak market; should you buy the stock?

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) rose over 5 per cent in intraday trade on BSE on Friday in an otherwise weak market. The stock opened at ₹645.35 against the previous close of ₹646.35 and rose 5.14 per cent to hit the intraday high of ₹679.60 in Friday's trade so far. The stock traded 3.30 per cent higher at ₹667.65 around 11:45 am on BSE. The Sensex was 0.50 per cent down at 65,360 at that time.

IRCTC on Wednesday reported a 5 per cent year-on-year (YoY) decline in its Q1FY24 net profit at ₹232.22 crore. The company's profit in the same quarter of the last financial year was at was ₹279 crore.

Segment-wise, IRCTC's revenue from the internet ticketing business declined 4 per cent to ₹290 crore in the April-June quarter. The revenue from the tourism business rose 58 per cent to ₹130 crore in the June quarter. The revenue from the catering segment rose 35 per cent to ₹471 crore during the June quarter. Also, revenue from the Rail Neer segment rose 10 per cent to ₹96 crore in the quarter under review.

Read more: IRCTC Q1 results: Profit dips 5% to ₹232 crore, revenue rises by 17%

The stock ended 0.38 per cent lower in the next trading session on Thursday.

However, it saw decent buying interest on Friday after experts expressed their positive views on the stock.

Brokerages upbeat

IDBI Capital maintained its buy call on the stock with a target price of ₹745 after the Q1 results of the company. The brokerage firm expects catering and tourism revenues to increase 22.4 per cent YoY and 22.8 per cent YoY, respectively, in FY24E mainly led by the conversion of an additional nearly 200 trains in catering and the addition of Vande Bharat & Bharat Gaurav trains.

IDBI Capital believes softness in ticketing revenue due to the absence of 2S (non-AC chair car) revenue is expected to be offset by higher convenience revenues. Further, considering Q1FY24 numbers and the increase in catering trains, the brokerage firm has revised its margin estimates upwards by 126 bps and 27 bps for FY24E and FY25E.

This has led to an increase in EPS (earnings per share) estimates upwards by 2.2 per cent and 4.6 per cent for FY24E and FY25E respectively, said IDBI Capital.

Technical views

While the fundamentals of the stock appear positive, technical analysts, too, find this stock attractive at this juncture.

"IRCTC has been trading in the ₹610-650 range for the last few weeks. It failed to participate in the rally seen in the PSU space. However, the stock is now witnessing a bullish triangle breakout on the weekly charts which will be confirmed on a close above ₹670 levels," Gaurav Bissa, VP, InCred Equities pointed out.

"The volumes have been trading above 20WEMA since the last couple of weeks, which is a sign of strong accumulation. The stock has witnessed strength on the back of a breakout in rsi on the weekly charts which can give a fresh thrust to the stock price. Investors can buy the stock at current levels for an upside to ₹750 with a stop loss placed at ₹625," said Bissa.

Aditya Gaggar, Director of Progressive Shares, pointed out that IRCTC has not only given a breakout from the cup and handle formation on the daily chart, but also a falling wedge breakout was witnessed in the stock which was confirmed with a breakout in RSI and an uptick in the volume.

"As per the cup and handle formation, the short-term target comes at ₹725 while the long-term target as per falling wedge arrives at ₹1,010," said Gaggar.

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Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.