Over-priced shares of IRCTC

1. IRCTC STOCK UP
OF ITS IPO PRICE
Divya Adhikari
Amity University,
Mumbai

2. • IRCTC has rallied 30% since the announcement of Budget
2020. In the last one month, the stock has climbed 64% and
since February 1, it is up 25%.
• No brokerage could forecast the stock’s correct target price.
• The stock has been rising in the last 3 trading sessions after
the Competition Commission of India absolved the
company’s allegations of unfair market practices.

3. • Indian Railways Catering and Tourism Corporation (IRCTC) shares rose to 500% since
its launch, after a stock market debut at a premium of 103% from the issue price in
October last year.
• One thing that no one could ever predict about IRCTC was its stock price rally.
• Many brokerages remained bullish on the stock prior to its IPO, and the scenario
remained much the same post company’s listing as well. However, one aspect that was
wrongly forecast by all brokerages was the stock’s target price.
• For instance, Prabhudas Lilladher in its recent research report recommended ‘buy’ on
the stock with a target price of Rs 1,339 apiece.
• On the contrary, the stock has made a quantum leap in just 3 months and has touched
its record high of Rs 1,547.80, 5 of its IPO price of Rs 320.
• After Budget 2020, the stock has once again kick-started its momentum on the back of
the Competition Commission of India absolving the company’s allegations of unfair
market practices.

6. • “Based on FY19 consolidated numbers, the issue is priced at a price to earnings (PE)
of 19 times. The company is likely to benefit from monopolistic nature of business,
significant growth over FY19-21, an asset-light business model with healthy
dividend payouts, and strong parentage," Motilal Oswal Financial Services Ltd said
in a 28 September note.

7. • IRCTC shares, which were issued at Rs 320, listed at Rs 644 on the
BSE and closed at Rs 729 on Monday, valuing the company at nearly
Rs 11,700 crore. In terms of over-subscription, the railway PSU's offer
was the most successful issue by a state-run company.