This stock multiplied over 5 times in 4 months making the Indian government richer by $2 billion

State-owned Indian Railway Catering & Tourism Corporation shares jumped almost 11% on Thursday morning after its profit more than doubled to ₹265 crore from the last quarter’s ₹73.59 crore. It has no competition, as the sole provider of catering and ticketing services for the Indian Railways, one of the largest rail networks in the world.

There may be more

The share price of IRCTC jumped almost 25% since the budget speech. Finance Minister Nirmala Sitharaman announced the Railways would allow private operators to run trains on selected 150 routes on a public-private partnership basis. The Tejas trains’ will run on key tourist routes across the nation

These Tejas trains will be operated by IRCTC instead of the Railways - which are upgraded versions of Shatabdi Express, with luxurious amenities. A third new train will also be added to run between Indore and Varanasi. It will be the first fully-air conditioned private train to make an overnight journey, thrice a week. The premium trains which are meant to attract flight travellers, will also rake in premiums unlike others which cater to passengers across economic strata.


The new train coaches are luxurious with LED screens and CCTVs for security and surveillance. The inauguration date is set for Feb 20, a day ahead of the Hindu festival Shivratri.

Did the government sell it cheap?

The government of India, which still owns 87.5% stake in IRCTC, sold a small 12.5% stake in October 2019 for ₹649 million. Since then the stock has multiplied over four times leading to criticism that the government could have made more money from the initial public offering (IPO).

Yogesh Mehta, founder at Yield Maximiser told ET that the scrip was undervalued at the time of IPO.

“It has jumped almost five times from the IPO price. But IRCTC is into monopolistic business in terms of catering and ticket booking. It has pricing power. There is no other competition. It has good prospects, with at least 27-28% growth rate. I believe that even if somebody asks me if 40 times PE multiple in IRCTC is reasonable, I will say yes,” Mehta told ET NOW.

However, in the four months since the IPO, the value of government stake has now grown and it is now worth ₹1,582 crore more. But if its number of trains rise, then it could be worth a lot more.

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