IRCTC was one of India’s best performing stocks - before Corona hit train travel

• Coronavirus concerns have wiped off nearly 50% of the investor wealth.
• In March alone, the IRCTC stock lost 40% of its value.
• Out of the twelve trading days in March, the IRCTC stock has hit the lower circuit on seven days.

IRCTC’s dream run has been an exciting story to watch since the initial public offer (IPO) in October last year. But lately it was hit by the coronavirus tsunami which wiped off 40% of the value in March alone.

The IRCTC bullet train had been scaling all-time highs since its debut in October last year. At its peak in February, IRCTC had a market capitalization of over ₹31,200 crore, but it has since fallen to ₹16,800 crore. As people shun travel, the stock is as affected as airlines. Yesterday, as many as 85 trains were cancelled making the stock tank 5% in today’s trade.

IRCTC stock tanked 40% in March alone

The IRCTC stock has been hitting new lows every second day in March. Out of the twelve trading days so far, it has hit the lower circuit on seven days. Its share price fell over 40% in March alone.

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Even before the cancellation of trains, low occupancy has been hitting IRCTC’s revenues.

IRCTC has also indefinitely postponed all its international tours scheduled for the next two months. All in all, coronavirus has had an adverse effect on its revenues. In fact, its monopoly in railway bookings couldn’t insulate it from global selloff and loss of business.

IRCTC stock lost half of its value since coronavirus hit India

IRCTC has had a bumper listing, which has become rare especially in a volatile market. It was issued at a price of ₹320 and was oversubscribed by more than 120 times.


If you were an IPO investor...

In the first four months of its listing, the IRCTC stock hit an all-time high of ₹1952.45, which is more than six times the issue price. If you were allotted shares in the IPO, your investment of ₹12,800 would have grown to ₹78,098 as on February 25 this year.

However, coronavirus has wiped 46% off the value, leaving an IPO investor with only ₹42,118.

Is this a good time to invest in IRCTC?

The massive correction in the IRCTC stock might make it an interesting option for those who missed out on the IPO. While it is not clear as to when exactly the stock will bottom out, investors can keep an eye out for an upward trend.

Healthy cash on its books, an almost three times increase in its net profit in the December 2019 quarter when compared to the same period in 2018, and a monopoly on the food business in railways makes IRCTC an option worth considering.

See also:

An Indian company has only one client and yet, it's a nearly $3 billion monopoly

IRCTC doubles investor wealth as its stock surges 128% on listing

The impact of coronavirus carnage on Radhakishan Damani’s portfolio