IRCTC share price hits fresh record high; should you buy? Check new target price

IRCTC share price rose as much as 4.05 per cent to hit a record high of Rs 1136 apiece on BSE on Thursday. It has been touching new record highs for at least three days in a row. IRCTC share price has surpassed its previous high of Rs 1,130.35 touched on Wednesday on BSE. The brokerage and research firm Prabhudas Lilladher has given a ‘buy’ rating to it with an upside of over 15 per cent. “Initiate with a BUY and target price of Rs 1,339 (24x FY22E EPS of Rs 56). Policy uncertainty in catering and reduction/abolishment of service charge are key risks to our call,” Prabhudas Lilladher said in a research note.

IRCTC made its market debut on October 14, 2019. Since then it has zoomed 263.75 per cent from its issue price of Rs 320 per share. The brokerage firm in its research report said that “being a monopoly, IRCTC will have first right to cater to the unmet demand which is currently captured by players like Bisleri, Kinley and Aquafina”. At 12.55 PM, IRCTC share was trading 1.73 per cent higher at Rs 1,137 apiece on BSE.

Effective from September 1, 2019, IRCTC has reinstated service charge for online bookings at the rate of Rs 15 for non AC and Rs 30 for AC. “We expect revenue kicker of Rs 3.6 bn/Rs 6.7 bn in FY20E/FY21E post levy of service charge resulting in a 57.3%/68.7% CAGR in internet ticketing revenue/EBIT respectively over FY19-22E,” Prabhudas Lilladher said. IRCTC also offers hospitality services on trains and locations. It has also been conferred the status of Mini Ratna by the government of India.

Among other developments in 2019, IRCTC has started operations as private train operator on Mumbai to Ahmedabad and Delhi to Lucknow routes. A revision was made in the menu and tariff of catering services on Rajdhani, Shatabdi, Duronto and standard meals on Indian Railways. “IRCTC is a monopolistic entity authorised to provide packaged drinking water, catering, and online ticket booking services to passengers travelling by Indian Railways. It has a dominant position in online rail bookings/packaged drinking water with nearly 73%/45% market share respectively,” Prabhudas Lilladher said in a research note.

Source: Financial Express