Cholamandalam Securities has come out with its report on IRCTC. The research firm has recommended to "Subscribe'' the IPO in its research report as on September 26, 2019
Only entity authorized by GOI to offer rail tickets, manage catering services onboard trains and supply drinking water at railway stations and in trains
With transaction volumes reaching 25mn a month and logins touching 7.2mn a day, IRCTC operates one of the largest transacting website in Asia-Pacific
As of June 30, 2019, more than 1.40 million passengers travelled on Indian Railways on a daily basis, which consisted of ~ 71.4% of Indian Railways' tickets booked online, implying ~ 0.8mn tickets booked online on a daily basis
The present 10 Rail Neer plants supply 1.8mn liters of packaged drinking water a day, thereby catering to 45% of the demand IRCTC is one of the three companies permitted by GoI to offer air tickets to both Central and State Government ministries
Valuation and OutlookThe company enjoys virtually monopolistic business which has huge potential to grow further. At upper priced band the issue is valuing company at P/E of 18.8x and P/B of 4.9x based on FY19 financials. The issue appears fully priced in considering historical financials & multiples. There are no direct comparable companies available for relative analysis.
The unique business model with no direct competitors is likely to attract investor’s attention and keep shares in demand.
Investors can consider investment for short to medium term, being the first mover in the sector there will be buying interest post listing too.
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