Market Fall: ‘Monopoly’ Stock Plunges 3% to 8-Month Low!

  • Stock Market Analysis
  • Editors Pick

The frontline Nifty 50 index might seem to be holding its ground, but looking at the broader markets, severe cuts are clearly visible. A few large caps are able to withstand the ongoing selling pressure which is creating a divergence in the market.

Most of the investors’ portfolios are still bleeding. However to capitalize on this sell-off they should hunt for long-term bets at attractive valuations. One such fundamentally strong stock that is a darling among market participants and is trading around an 8-month low is Indian Railway Catering And Tourism Corp (NS: INIR ).

It is the only operator of railways in India, having a market capitalization of INR 48,004 crores, and comes under the administration of the Ministry of Railways, Government of India. Due to its pure monopoly, it is among the all-time favorites of many investors. However, on account of the ongoing sell off, the share price of IRCTC has also been hammered down to an 8-month low of INR 577.45, as it plunged 2.99% in today’s session.

The company’s business has been growing at a rapid pace and its TTM revenue of INR 3,375.77 crores is not just higher than the pre-pandemic level, but also the highest ever for IRCTC since its inception. Consequently, the TTM net income also crossed INR 940.85 crores, the highest ever. For the last three fiscal years, the company has been reporting its profit margins above 20% which is no less than commendable.

FIIs’ stake in the company has also reached 6.84%, by December 2022 which is the highest in the last 4 quarters. Not just that, DIIs have almost doubled their stake in one year, from 4.17% in Q3 FY22 to 8.19% in Q3 FY23. As per the latest shareholding pattern, over 21 lakh resident retail investors (with a capital of up to INR 2 lakh) are invested in IRCTC.

But why the stock is getting sold off which attracts almost every investor? The reason is the return of Covid-19 (at least, the scare is visible in the markets). India’s Covid-19 caseload jumped to 1,900 on 25 March 2023, which is a 5-month high and higher positivity rates are being witnessed in Mumbai and Delhi. In fact, PM-level emergency meetings are also taking place with state governments ramping up their preparedness.

Hence, travel-related stocks are getting battered in this environment and IRCTC is a no-brainer. However, as the market sometimes tends to overreact, if this surge does not translate into trouble (which I believe it won’t) then this might be a good time to accumulate IRCTC shares for the long term. Accumulation in tranches can also be done if you believe you can see even lower levels in the coming days.

Read More: A ‘Major’ Breakdown in F&O Stock; Cracks 4%!

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