IRCTC gains 4 per cent on data monetisation plan; analysts see more upside

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) jumped to a high of Rs 741.90, up over 4 per cent in intra-day trade on Friday on the BSE, as the company announced plans to monetise its passenger data bank. In the last two trading sessions alone, the stock surged nearly 10.5 per cent as compared to S&P BSE Sensex that moved up 0.1 per cent during this period.

In a first of its kind move, IRCTC – ticket booking arm of the Indian Railways – is looking to monetise its bank of passenger data while conducting business with private and government companies. The company aims to raise up to Rs 1,000 crore through this exercise. IRCTC has a large bank of data related to every online railway ticket ever generated as it is the country's only railway ticketing platform.

“The company has just floated a tender to appoint a consultant to look for possible alternatives to monetise its data. The objective is to target up to Rs 1,000 crore from this exercise, but the whole process shall be set into motion only after a consultant is appointed. Till such time, we await for more clarity on this development,” said Devang Bhatt, lead analyst at IDBI Capital Markets & Securities.

As of 10:40 AM, the stock was seen trading near the high's of the day, up 3.6 per cent at Rs 739, while the benchmark BSE index was trading flat around the 60,300-level. The counter witnessed healthy volumes of around 4.33-lakh shares as against the two-week average traded volume of around 3.64-lakh shares.

For the quarter ended June 2022 (Q1FY23), IRCTC reported a 196 per cent surge in net profit at Rs 246 crore when compared with Rs 82.50 crore in the corresponding quarter a year ago. Total income grew 251 per cent YoY to Rs 853 crore.

“Given the beat on revenue front, we increase our top-line estimates by 5.8 per cent / 6.3 per cent for FY23/FY24 as we re-align our assumptions for catering business. We believe ticketing volumes will be keenly eyed in near term as reversal in 2S class is applicable from July,” wrote Jinesh Joshi and Shweta Shekhawat of Prabhudas Lilladher in a recent coauthored note.

Those at IDBI Capital, too, remain bullish on the road ahead for the company given its June 2022 quarter results. The company, they said, expects revenue growth to be robust for FY23 mainly led by improved demand in the catering and tourism business segments. Margins are expected to observe some softening as the share of catering and tourism business revenues increase.

“Going forward, IRCTC expects the catering segment to grow in double digits led by strong e-catering business. Further, tourism is also expected to improve, led by an increase in travelling. We believe the focus on e-catering initiatives and increasing revenues from advertisement & license fees bodes well for long-term profitability. We maintain our buy rating on the stock with a target price of Rs 804 /share (PE of 57x on FY24E EPS),” Bhatt said.

Technically, the stock has rallied over 16 per cent thus far in August and is now within striking distance of its 200-DMA (Daily Moving Average) placed at Rs 748, which is a sign of bullishness. The stock has been trading below the 200-DMA since the end of April 2022.

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