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Alpha | IRCTC Ltd. – Equity Research Desk

January 3, 2023 . Equities Desk

Alpha . Equity Research

IRCTC Ltd. – A Regulated Monopoly

Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) is a “Mini Ratna (Category-I)” Central Public Sector Enterprise under Ministry of Railways, Government of India. IRCTC was incorporated on 27th September, 1999 as an extended arm of the Indian Railways to upgrade, professionalize and manage the catering and hospitality services at stations, on trains and other locations and to promote domestic and international tourism through development of budget hotels, special tour packages, information & commercial publicity and global reservation systems. At present, the Company operates through Fifteen Rail Neer Plants for packaged drinking water segment and 11 Base Kitchens for catering services. The company has Five Zonal Offices, Ten Regional Offices, One Internet Ticketing office and Tourism office.

Valuation

Going by the business model and financials of IRCTC, it seems like there is no looking back for the Mini-Ratna company. Moreover, the monopoly granted to it by the Ministry of Railways further boosts its growth. IRCTC is also constantly diversifying its business and using technological advancements to strengthen itself further. Hence, we recommend an ACCUMULATE rating in the stock with the target price (TP) of Rs.800, 45x FY24E EPS.