Indian Railway Catering and Tourism Corporation (IRCTC), the online ticketing, tourism and the catering arm of railways on Monday made a thumping debut at Dalaal Street. The IRCTC's share opened at Rs 644, a 101 percent premium over its issue price of Rs 320 per share on the Bombay Stock Exchange (BSE). Retail investors had more reasons to joy as they were offered shares at a discount of Rs 10 per share. At the close of business on Monday, the stock price of IRCTC stood at Rs 728.60 apiece, a jump of around 128 percent.
Government-owned IRCTC raised Rs 645 crore through its initial public offer (IPO). The issue created a buzz among investors in all the categories. The IPO was subscribed by almost 112 times. The over-subscription made IRCTC IPO becoming the most successful share sale in the last 20 months. In the retail segment, it was subscribed around 15 times while qualified institutional buyers (QIBs) segment got subscribed 109 times and non-institutional investors (NIIs) category 355 times. Notably, IRCTC has monopolised service provider to Indian Railways that offers catering services to railways, online railway tickets and packaged drinking water at railway stations and trains across India.
Most brokerage houses had given a 'subscribe' rating on the IRCTC giving the monopolistic nature of business. Analysts at Motilal Oswal Financial Services (MOFSL) had said because of consistent growth over the financial year 2019-21 and an asset-light business model with healthy dividend payouts, and strong parentage the stock is poised to perform well in the market. But given the huge return only at its debut day, should you book profit or just hold the chip for bigger returns? Well, the analysts are divided on the issue.
As per a report in financial daily Business Standard, some analyst feels that because of its unique and monopolized business it's a good long-term investment bet. The antagonists, however, the euphoria around its opening at BSE is over and retail investors have earned enough giving them the best chance to exit. Ambareesh Baliga, an independent market analyst said, "One should not be in a hurry to exit. The stock price may not shoot up from here significantly but it is a good long-term investment bet." On the other hand, Sudip Bandyopadhyay, group chairman at Inditrade Group of Companies argued, "My suggestion to the value investors would be to just stay on the sidelines and watch the stock price movement where it settles in a day or two and then take a call. As far as small investors are concerned, maybe it's a chance to exit."