Indian Railway Catering and Tourism Corporation is a majority government-owned company that provides ticketing services for flights and trains, catering services in trains, and sells packaged bottled water. The company also organises tourism packages. The IRCTC share is a play on how much people are willing to travel by train.
Under this backdrop, the outlook of the company’s business has increased as the Indian economy is gradually coming out of the impact of the pandemic. Train operations have largely normalised, opening streams of revenue for the company.Since listing on the bourses in 2019, the IRCTC share price has jumped manifold. In recent months though, the stock has delivered negative returns (as of June 13, 2022, down 50% from its 52-week high levels), falling along with the broader market, which has bled profusely.
Though the reasons for the selloff in the IRCTC share price NSE are a few, it also presents an opportunity for investors to grab the shares at relatively lower prices. So, can 2022 be the year of IRCTC? Analysts are mixed about its prospects. Strengths, weaknesses, opportunities, and threatsanalysis by ICICIdirect put strengths and weaknesses evenly against each other for IRCTC. It finds two threats against zero opportunities.
According to the analysis, strengths include:
-IRCTC has a high Piotroski Score, meaning it is a company with solid financials.
-The company has delivered good quarterly growth in the recent results. Its net profit has grown with increasing profit margin year on year.
-For the last three quarters, as train operations have normalised, IRCTC has managed to increase revenue and profits every quarter.
-The company has no debt on its books.
-The promoters of the company have not pledged the shares they hold.
At the same time, there are a few points of weakness for IRCTC:
-Mutual Funds decreased their shareholding last quarter.
-The cash flow has declined in the last two years, meaning it has struggled to generate cash from its business activities.
-The IRCTC share price today has weak momentum as it is trading below short-, medium-, and long-term averages.
-The prices have also broken down below the third support level. Italso trades below the signal line on the MACD indicator, which is a bearish sign. MACD, or moving average convergence/divergence, is a momentum indicator used by technical analysts
Though ICICIdirect finds no opportunities, it sees a couple of treats, including its high price-to-earnings ratio, currently at 75 times, and increasing trend in non-core income
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