Even as IRCTC shares slip nearly 7% intraday; what is the road ahead for this stock? See positives and negatives

Shares of Indian Railway Catering and Tourism Corporation slipped almost 7 per cent to touch day’s low level of Rs 745.5 per share on the BSE intraday during Friday’s session. According to Zee Business research the stock slipped mainly due to railways resumed sale of general tickets. 

The railways amid Corona crisis had made compulsory to book tickets for general coach too, and it was then converted into second sitting (2S). However, the fall in covid cases the railways has rolled back the decision and allowed to sale unreserved tickets amid upcoming festival Holi. 

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This news has created a dilemma within investors and has resulted into a negative impact. Mainly because the 2S category bookings account for 38 per cent of total bookings. With removal of 2S bookings, the company may see a 30 per cent drop in total volumes, the research report states. 

Moreover, the ticketing revenue may drop by 15-20 per cent and 15 per cent drop in non-ticketing revenue also likely, the report further adds. However, the total income expected to decline by 6-8 per cent and will also have an impact of 12-15 per cent on EPS. 

However, everything is not bad for the IRCTC, the company’s realization will improve by removing 2S category bookings, with AC/Non-AC ticket mix will get better. Zee Business research estimates possible improvement of 13 per cent in total realization. 

The rising crude oil prices may increase worries for many sectors including aviation category, as the air travel may become expensive. In this regard, IRCTC is the direct company that may benefit from air travel being expensive, as train will be a better option for many travellers during summer season. 

At around 01:04 pm, the stock is down over 5.5 per cent to Rs 755.15 per share on the BSE as against 0.63 per cent fall in the S&P BSE Sensex. The stock in the last one month reported negative return of almost 12 per cent, while it has gained around 25 per cent in the last 6 months.