InvestorQ : Why are so many analysts still so positive on IRCTC, when railways are running skeletal services?
swati Bakhda made post

Why are so many analysts still so positive on IRCTC, when railways are running skeletal services?

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Sam Eswaran answered.
3 weeks ago
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While the spike in COVID-19 cases in the last few months may pose a short-term risk to IRCTC, the monopolistic nature of its business, its low fixed-cost model, strong cash flow generation and a near monopoly control over catering and ticketing makes it a big pick for Indian investors and analysts. The stock did correct 15% after touching a peak of Rs.2073, but that has not deterred the analysts and brokerages from remaining bullish.

Some of the triggers for the stock are seen as online ticketing, conversion of unreserved coaches to sleeper class, bigger focus on packaged drinking water and resumption of private trains. Most analysts are factoring in further upside in the stock of up to 50%. Online ticketing now accounts of 93% of the tickets booked and that has worked as a big boost for IRCTC. Even post pandemic, the online ticketing is expected to stabilize around 85%.

IRCTC is poised to touch double-digit growth in revenues. In fact revenues are estimated to grow at CAGR of 16% over the next five years. However, most analysts have warned that the stock is still vulnerable to sudden shifts in government policy pertaining to the monopoly status of IRCTC as well as regulations pertaining to the spread of the pandemic and consequent extended lockdowns.

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