Why Is the IRCTC Stock Continuously Rising? Understanding the Factors Behind the Bull Run

Recently, India Railway Technical and Counseling (IRCTC) has seen a significant rise in its stock price, making it one of the most talked-about entities in the financial markets. This surge has been fueled by multiple factors, including a stock split, increased railway ticket bookings, and the company's diversification into the hospitality sector. Let’s delve into what exactly is driving this bull run and what we can expect in the future.

The Impact of Stock Split

The primary reason for the IRCTC stock’s upward trajectory is the stock split announcement. On Thursday, IRCTC announced a 1:5 split, which resulted in a flurry of trading activity. This move encouraged investors to participate and increased the liquidity of the stock. While the stock hit a daily upper circuit during initial trading, the price later adjusted after a government plan to share half of its revenue from convenience fees was withdrawn.

Euphoria and Optimism

The stock split marked a turning point, leading to what can be described as euphoria and optimism among investors. IRCTC is a monopolistic entity within the railway domain, giving it perceived higher valuations. This situation is similar to entities like Coal India or the State Bank of India (SBI), where investors enjoy the benefits of such a position.

However, with the railway ministry’s request for sharing revenue, the stock adjusted downwards on Friday. Investors now need to justify the continued upward trend, leading to a search for additional reasons. Increased railway ticket bookings during the July to September 2021 quarter have provided this justification, driving expectations of strong quarterly numbers.

Immediate Reason for the Rise in IRCTC Shares

Experts believe that the immediate reason for the rise in IRCTC shares is a 100 percent increase in railway ticket bookings during the July to September 2021 quarter. This surge in bookings is expected to translate into robust quarterly results, especially because IRCTC enjoys a monopoly in online train ticket booking.

In addition to this, IRCTC is rapidly diversifying into the hospitality sector. This diversification is expected to fuel the IRCTC stock price further, driving optimism among investors.

IRCTC's Undervalued Status Due to Lockdown

Another significant factor contributing to IRCTC’s positive trajectory is its undervalued status due to the prolonged lockdown. As a debt-free company, IRCTC offers a unique investment opportunity in a market where many other players face substantial debt burdens.

The company recently posted a 100% increase in railway ticket bookings in the July to September 2021 quarter, highlighting its resilience and potential for growth. This performance alone has contributed significantly to the stock’s rise.

Long-Term Prospects

IRCTC is embracing the hospitality sector, with a flurry of developments anticipated. This move will likely stimulate further growth and attract more investors. Additionally, IRCTC stands out as an exclusive player in the railway domain, giving it a monopoly advantage. The government’s plan to sell its stake in the near future is also expected to enhance its market share and valuation.

One investor considers IRCTC their first stock to achieve a 100% return, and given the current trends, such expectations seem increasingly plausible.

The IRCTC share price currently stands at Rs 5398, maintaining a steady upward trajectory. Experts predict that the share price will continue to move upwards, propelled by the company's focus on its hospitality sector and ongoing positive developments.

As we look towards the future, the IRCTC stock's journey is promising. Continued growth in railway ticket bookings, strategic diversification, and a debt-free status make IRCTC an attractive investment opportunity, especially given the bullish sentiment in the market.