IRCTC soars almost 50% in one month on expansion strategy, boost in train bookings

• The Indian railways stock has surged over 400% since its debut on the stock exchanges in October 2019.
• Analysts are highly positive about IRCTC’s aggressive expansion plan in the hospitality sector and believe that the stock would reach ₹5,000 from the ₹3,000-level currently.
• The market capitalisation of the stock is ₹63,726 crore.

Shares of the Indian Railway Catering and Tourism Corporation (IRCTC) have been trading with huge volumes in the last few weeks to gain almost 50% in one month.

These quick gains have made the shares of the company spike 5 times i.e., 410% since its listing on exchanges in October 2019.

Analysts believe the stock price is rising because of the company’s aggressive expansion plan in the hospitality sector.

"IRCTC is aggressively focusing on its hospitality business by tying up with hotels, tour and travel service providers and local food suppliers. It is also giving special focus to its food chain business in running trains. Apart from this, IRCTC has made tie-ups with aviation companies as well. So, [the] market has realised that in coming times, it is no more [sic] going to remain an Indian Railways' e-ticket booking platform. It will emerge as A-Z hospitality service provider," said Ravi Singhal, vice chairman at GCL Securities according to a report by Mint.

Analysts at Swastika Investmart reportedly say the reopening theme post covid restrictions is the reason for the traction in the stock along with news of stock split. Railways' asset monetisation plan is another trigger for the stock rise.

On August 12, IRCTC approved a stock split in the ratio of 1:5 to enhance the liquidity in the capital market, widen the shareholder base and make the shares affordable to small investors. A stock split is generally done to make the stock more affordable for the small retail investors and increase liquidity.

On September 17, the stock was up 5.44% as of 10:43 a.m., with heavy volumes. 5.29 million shares changed hands on the exchanges as compared to a roughly average volume of around 1 million shares.

IRCTC is a central public sector enterprise operating in four segments, namely internet ticketing, catering, packaged drinking water, and travel and tourism. Aside from being the preferred portal for booking tickets, its subsidiary Rail Neer already accounts for nearly one in every two bottles of water sold in any railway station in India.

Moreover, the company has been performing well on the financial front as it made a profit of ₹82.53 crore in June quarter 2021 as compared to loss of ₹24.60 crore during the same period last year.

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