IRCTC's tie-up with Swiggy a win-win for both; check what tech charts suggest for PSU stock

IRCTC share price: Shares of Indian Railway Catering and Tourism Corporation (NSE: IRCTC) rose over 2 per cent in the morning deals on Friday (February 23) for the second consecutive session. The stock drew buying interest after the company announced that it has tied up with food aggregator Swiggy for the supply and delivery of pre-ordered meals through the IRCTC e-catering portal.

At around 9:41 a.m., shares of IRCTC traded 2.25 per cent, or Rs 21.05, higher at Rs 957 apiece. The company's market capitalisation at around the same time stood at Rs 76,388 crore. 

On Thursday after market hours, the Indian public sector undertaking that provides ticketing, catering, and tourism services for the state-owned Indian Railways announced that it has tied up with Bundl Technologies Pvt. Ltd. (Swiggy Foods). 

It further said that the first phase of the pilot programme will be done at four railway stations, i.e., Bengaluru, Bhubaneswar, Vijayawada, and Visakhapatnam, and the e-Catering service through Swiggy Foods may be available soon for the passengers. 

IRCTC Q3 results

IRCTC reported a consolidated net profit of Rs 300 crore for the quarter ended December 31, 2023, up 17.4 per cent on a year-on-year basis. Its revenue grew 22 per cent to Rs 1,118.3 crore for the quarter under review, according to a regulatory filing.

The company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased 21 per cent to Rs 394 crore for the fiscal third quarter. At the same time, margin, a key measure of profitability, stood at 35.2 per cent. 

Revenue from the PSU's catering and internet ticketing units increased by 29 per cent and 11.4 per cent to Rs 508 crore and Rs 335.3 crore, respectively, according to the filing.

What does this deal mean for the companies?

The partnership between IRCTC and Swiggy is a win-win situation for both. Swiggy will get a boost as it will see a steep rise in demand due to the high passenger traffic in the country, whereas for IRCTC, the tie-up will enhance the passenger experience as the entity will leverage Swiggy’s robust network to offer passengers a diverse array of pre-ordered meals, note analysts. 

IRCTC's collaboration with the online food delivery platform will help improve the former's brand image, increase its operational efficiency, and help the state-run entity's potential expansion, they add.

"IRCTC partnering with Swiggy for pre-ordered meal deliveries will increase convenience for passengers, offer wider food options, and improve its brand image," said Atul Parakh, CEO of Bigul. 

However, execution is the key, as implementing Swiggy's delivery network with IRCTC's operations could be complex and lead to delays or disruptions, the analyst notes. 

Aditya Goela, CFA and co-founder of Goela School of Finance, believes IRCTC’s collaboration with Swiggy marks a significant stride in enhancing the passenger experience.

"From a long-term perspective, IRCTC stock is a good hold. However, it seems to be a bit turbulent for the short to medium term since there are a lot of uncertainties with elections coming up," said Goela.

Goela added that as the service expands, investors eye the potential growth trajectory of IRCTC shares, anticipating a favourable market response to this innovative venture.

IRCTC shares: What do the technicals suggest?

As per Jigar S. Patel, Senior Manager, Technical Research Analyst, Anand Rathi Shares and Stock Brokers, the stock on the charts is signalling potential strength in the stock's upward movement.

"The reversal of the daily stochastics from the pivotal 50 levels suggests a shift towards bullish momentum, signalling potential strength in the stock's upward movement. If the stock manages to close decisively above the resistance at Rs 968, it could pave the way for a move towards the Rs 990 mark in the near term, reflecting a bullish sentiment among investors," said Patel.

The technical expert added that looking ahead, in the next few trading sessions, the level around Rs 940 is expected to provide credible support, potentially acting as a buffer against downward price pressures and reinforcing the overall bullish outlook for IRCTC.

IRCTC share price performance 

In a year, IRCTC shares have gained over 59 per cent against the Nifty50's rise of over 27 per cent.

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