IRCTC shares on the edge waiting for the first lockdown earnings

BCCL
  • IRCTC is set to announce its fourth-quarterly results on July 10.
  • This time due to the “outbreak of COVID-19, there has been a decrease in train journeys by the passengers due to restriction on public movement, which led to less number of ticket bookings during March 2020, resulting in a drop in e-ticketing earnings through convenience fee,” the company said.
Indian Railway Catering and Tourism Corporation (IRCTC) is set to announce its fourth-quarterly results on July 10 after postponing it once due to “unavoidable circumstances.”

The shares of the nearly $3 billion company have been trending down for a month now. The stock has lost about 9.28% in the last one month.


Investors aren’t very hopeful of the company’s immediate prospects after it intimated stock exchanges of the material impact of COVID-19 pandemic on its revenue.
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The coronavirus crisis forced people to avoid unessential travel.


As a player in travel and hospitality sector, IRCTC's prospects are dim but being a monopoly means everything that's on the table belongs to it. That would explain the spectacular margins it earns in different segments.

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SegmentMarginContribution to revenue
Ticketing85%31.60%
Catering33-35%37.50%
Rail Neer37%8.10%
Tourism26-28%22.50%
*All these are gross margins, except in ticketing, which is operating margin
Source: Prabhudas Lilladher

Analysts however see IRCTC as a good stock for the long term. “Despite near term challenges, we believe IRCTC is best placed to bounce back once COVID fear resides as structural levers remain intact... However, we would advise staggered buying and do not rule out near term weakness," a Prabhudas Lilladher report in April said, pegging a target price of ₹1,656, which would imply an 16% gain in the next one year compared to the share price on July 08.

SEE ALSO: IRCTC website crashes as it reopened for booking after 50 days — now, it will be open for bookings from 6 pm

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