IRCTC joins top 100 market cap league
Led by a strong rally in the past month, Indian Railway Catering and Tourism Corporation (IRCTC) has entered the list of top 100 companies in terms of market capitalisation (m-cap).
Shares of the online ticketing, tourism, and catering arm of the Indian Railways closed at a new high of ~1,952 on Tuesday on BSE, up 1.5 per cent. In the past month, the stock has zoomed 95 per cent, as against a 3 per cent decline in the S&P BSE Sensex.
With m-cap of ~31,239 crore, IRCTC stood at the 97th position in the overall market capitalisation ranking, the BSE data showed. On its listing day, October 14, 2019, the company's m-cap stood at ~11,658 crore, and was ranked 194th.
Currently, IRCTC'S m-cap is more than two of the Nifty 50 companies — Zee Entertainment Enterprises (~24,195 crore) and YES Bank (~8,965 crore). The company has also surpassed 27 companies on the S&P BSE 100 index, including MRF, Lupin, Aurobindo Pharma, Page Industries, Apollo Hospitals Enterprise, ACC, Ashok Leyland, Bharat Forge, and TVS Motor during the period.
With Tuesday’s rally, IRCTC has zoomed 510 per cent, as against its issue price of ~320 per share on BSE. The company had declared an interim dividend at the rate of ~10 per share, which is 100 per cent of paid-up share capital. The stock had turned ex-date for dividend on Monday.
Monopoly business
IRCTC is the only entity authorised by the Indian Railways to provide catering services to the Railways, online tickets, and packaged drinking water at railway stations and trains in India. For the October-december quarter, the company posted a strong profit growth on the back of a healthy performance in e-ticketing services. Its profit before tax (PBT) from e-ticketing services jumped over five times to ~193 crore during this period, as compared to ~36 crore in the same quarter of the previous year.
Overall, IRCTC posted a net profit of ~206 crore in the December quarter, as against ~74 crore in the year-ago quarter. The total revenue of the subsidiary of the Indian Railways rose to ~716 crore from ~435 crore in the yearago quarter. The revenue from IRCTC e-ticket services jumped four times to ~227 crore in Q3FY20, as against ~55 crore a year ago.
The Railways has approved the new tariff for the catering for premium and non-premium trains and the static unit. The revised rate will be applicable from March 28 on prepaid trains. The Railways, too, plans to add pantry cars in long-running trains.
“Given the reintroduction of service charge (~15/ ~30 per ticket for NON-AC/AC, respectively) from September 2019, capacity expansion in Rail Neer (aim is to increase the number of plants to 20 by FY21E), and average increase in mobile/static catering tariff ’s by around 70 per cent / 61 per cent, we expect sales/pat to grow at a compound annual rate (CAGR) of 24.5 per cent/54.7 per cent over FY19-22E,” wrote analysts at Prabhudas Lilladher in a recent report.
Meanwhile, the Railways is planning to add 150 trains on a private basis and IRCTC is likely to participate in the projects; it has already appointed a consultant. “IRCTC has added two Rail Neer plants during Q3FY20. It would add two more plants in the current quarter,” analysts at Narnolia Financial Advisors said in a note.