Why IRCTC Share Price is Falling

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) have slipped 30% in the last one year, logging losses for the first time in a fiscal since their listing in October 2019.

The stock has seen subdued sentiment since 31 March 2022. Even when railway stocks gained traction towards the latter half of 2022, IRCTC continued its downtrend.

This downturn of IRCTC shares is persistent in 2023 too.

In the past three months, shares of the tourism and ticketing arm of Indian Railways have declined 12%, touching its 52-week low on 28 March 2023.

Let's find out why this multibagger stock is reeling under pressure.

Market volatility impact

The calendar year 2023 so far has been a bumpy ride for Indian equities.

First, the rout in Adani group stocks dampened investor sentiment, which made investors question whether India is at a war.

Second, the collapse of several banks in the US and Europe further dampened investor sentiment.

In addition, higher-than-anticipated interest rates in the US added to market's woes.

These successive blows, amid high global inflation and ongoing geopolitical tensions, have kept stock markets on the edge.

With these concerns mounting, the Nifty fell 1.1% while the Sensex fell 1.3% during the month.

So far in 2023, the Sensex has lost over 3.5%, while Nifty has fallen 4.5%.

Railway stocks have been particularly affected, with 4 out of 7 stocks delivering negative returns of over 15% to investors.

This is because railway stocks are highly volatile and tend to be impacted by market fluctuations, especially during a downturn.

With IRCTC being no exception to this falling trend, it has fallen prey to this selloff, declining over 25% in 2023.

Positive long-term outlook

Moving forward, IRCTC is all set to boom as demand for setting up railway lines increases.

The company is taking strategic initiatives, such as launching a special train for Sikh pilgrims and expanding its ticketing services, including online booking for helicopter service to Kedarnath Dham.

It will benefit from increased license income in catering as it returns to pre-Covid-19 levels. In addition, with increased acceptance of online ticket booking, internet ticketing is set to remain robust.

Furthermore, the company anticipates tourism to improve, led by the increase in travelling and the introduction of new Vande Bharat trains.

These tailwinds, coupled with the growing revenues from advertising and license fees, bode well for IRCTC's long-term profitability.

How IRCTC shares have performed recently

IRCTC shares have declined by more than 7% in a month. Over the past week, the company's shares are trading lower by 4%.

So far in 2023, the share price of the company has eroded over 11%.

IRCTC touched its 52-week high of Rs 840.9 on 5 April 2022 while it touched a 52-week low of Rs 557on 6 July 2022.

About IRCTC

On 27 September 1999, the Indian Railway Catering and Tourism Corporation (IRCTC) was founded as a public limited company and was awarded a certificate of incorporation by the deputy registrar of companies NCT of Delhi and Haryana.

It's a central public sector enterprise (CPSE) owned by the Indian government and administered by the Ministry of Railways.

IRCTC is the sole firm authorised by Indian Railways to provide catering services, online railway tickets, and bottled drinking water at Indian railway stations and trains.

The firm was founded with the goal of modernising and professionalising culinary and hospitality services at railway stations, aboard trains, and in other locations.

It also promotes both international and domestic tourism in the country.

To know more about the company, check out IRCTC's company fact sheet and IRCTC's quarterly results.

You can also compare IRCTC with its peers on our website.

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