IRCTC shares rally 5% as Macquarie initiates with 'outperform', forecasts 15% upside

IRCTC stocks have been on a tough patch, falling 11 percent in the last three months.

Shares of IRCTC gained as much as 5 percent to Rs 800.75 on January 10, snapping its two-day losing streak on the bourses, after international brokerage Macquarie initiated coverage with an 'outperform' rating and assigned a target price of Rs 900.

The new target price of Rs 900 implies an upside potential of 15 percent from the last closing price on the National Stock Exchange (NSE). IRCTC stocks have been on a tough patch, falling 11 percent in the last three months.

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Macquarie said that IRCTC's unparalleled monopoly in Indian Railways’ e-ticketing and catering services remains its standout strength, positioning it as a leader of the country’s railway modernization journey. According to the international brokerage, India’s ambitious push towards railway modernization and the accelerated rollout of premium trains could act as growth catalysts, with the potential to double IRCTC's stock value in the coming years.

IRCTC also operates one of the Asia-Pacific region's most heavily trafficked websites and has diversified into non-railway catering, e-catering, executive lounges, and budget hotels, aiming to offer a seamless and comprehensive customer experience.

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The company’s financial health further underpins its appeal, boasting a robust free cash flow margin of 30 percent and returns exceeding 30 percent on both equity (ROE) and invested capital (ROIC). As the sole authorized provider for catering services, online railway ticketing, and packaged drinking water for Indian Railways, IRCTC has played a pivotal role in elevating the efficiency and professionalism of railway operations.

In the third quarter, the company reported a net profit of Rs 300 crore for the December quarter, marking a growth of 17.4 percent from Rs 255.5 crore posted in the year-ago period. Revenue increased 21.8 percent year-on-year to Rs 1,118.3 crore.

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IRCTC is the catering and ticketing arm of the Indian Railways, which manages food services on trains and offers online ticket booking services.

At about 12:45 pm, shares of the company were trading at Rs 788, higher by 3.2 percent.