Should you buy IRCTC post over 150% growth in Q3 net profit?

Indian Railway Catering and Tourism Corporation (IRCTC) ticked all the boxes with a sharp rise in net profit for the quarter ended December 31. The bottom line of the IRCTC jumped 167 per cent year-on-year (YoY) to Rs 208.80 crore in Q3FY22 over Rs 78.08 crore in Q3FY21. The surge in profit came due to the low base and contribution from all other segments.

Market watchers advised investors to buy the stock for the long term. Shares of the company traded 1.22 per cent higher at Rs 848.35 in the afternoon trade on February 9, while the benchmark BSE Sensex traded 0.70 per cent higher at 58,215 at around 1.23 pm (IST).

Ravi Singhal, vice chairman, GCL Securities said, “IRCTC has reported great results in all parameters. Investors can look to buy the IRCTC stock on dips, keeping a target price of Rs 1,350 with a one-year time frame.”

Revenue from operations also jumped 140.76 per cent YoY to Rs 540.21 crore during the quarter under review. Meanwhile, IRCTC’s revenues from the Internet ticketing business were up 118 per cent to Rs 312 crore in the December quarter. The figure stood more than doubled compared to Rs 143 crore in the year-ago period.

It also declared an interim dividend of Rs 2 per share for FY22 and fixed February 18 as the date for payment. Segment-wise, IRCTC’s revenue from catering services increased 117 per cent to Rs 104 crore during the December quarter of FY22 compared to Rs 48 crore in the corresponding quarter of last year.

On the other hand, its tourism segment revenue increased 353 per cent to Rs 68 crore in Q3FY22 against Rs 15 crore in the year-ago period.

Ravi Singh, VP and head of research, Share India Securities added that IRCTC witnessed a steep surge in net profit due to contribution from all the segments and low base of last year. The recent announcement on additional Vande Bharat trains in the Union Budget is going to benefit IRCTC in long term. “At the current juncture, technical setup is suggesting a target of Rs 950 levels in the near term,” he added.

Manoj Dalmia, founder and director, Proficient Equities said, “The stock has been consolidating for a long time in a range. Any breakout above Rs 926 will lead to good moves. We expect an upside of about Rs 20-25 per cent. We are bullish on IRCTC considering various initiatives taken by the government for railways. Investors should ‘Hold’ the stock for long-term.”
 

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