Buy PSU-Miniratna Stock For High Returns, Board Recommends 100% Dividend, Says IDBI Capital

Broking firm IDBI Capital has initiated a Buy rating on Indian Railway Catering and Tourism Corporation Ltd. (IRCTC), a Mini Ratna - Category-I CPSE under the Ministry of Railways, Govt. of India. The brokerage has assigned a target price of Rs.740/share to the stock, claiming a potential upside of up to 15% from its current level.

The company in the Board meeting held on Monday, May 29, 2023, recommended a Final Dividend of Rs. 2/share of the face value of Rs. 2 each for the financial year 2022-23.

IRCTC is a large-cap PSU firm operating in the Tourism and hospitality sector. It has a market capitalisation of Rs. 51,496 crore.

100% Final Dividend

According to a regulatory filing by the Board of Directors of IRCTC, "Recommended a Final Dividend of Rs.2/- per equity share of face value of Rs. 2/- each for the financial year 2022-23 [@100% of the paid-up share capital of Rs. 160 cr.] subject to tne approval of shareholders in the forthcoming Annual Generat Meeting. This Final Dividend is in addition to the lnterim Dividend of Rs.3.50/- per share dectared by the Board of Directors in the month of February 2023 and already paid to the shareholders;"

Tourism and addition of trains key growth drivers

According to IDBI Capital, Indian Railway Catering and Tourism Corporation (IRCTC) revenues increase by ~40% YoY mainly led by catering and tourism revenues. Increase in trains having pantry car (from 417 to 492), train side vending and a pipeline of 300 trains is expected to drive Catering revenues (CAGR of 13% over FY23-25E). In addition, Bharat Gaurav trains (Rs 60 crore to 250 crore) & general election will drive tourism revenues (CAGR of 24%). Further, addition bottling plants will drive rail neer revenues (19% CAGR). "Margins are expected to taper a bit however, expected to remain above pre-covid levels. In addition, we expect revenue to continue on growth trajectory led by focus on e-catering and advertisement & license fees. We maintain our BUY rating with a target price of Rs 740/share (PE of 47x on FY25E EPS; prev TP Rs 750)," the brokerage has said.

Stock Outlook

The stock of IRCTC is currently trading at Rs. 645/share. Monday, it opened at Rs. 636.35/share, while its previous close was Rs. 645.45/share on NSE. The stock's 52 week high is Rs. 774.90/share and52 week low is Rs. 557/share, respectively.
It has fallen 0.05% in the past 1 week. Whereas, it jumped 3.21% in the past 1 month and 5.13% in the past 3 months, respectively. It has fallen 3% in the past 1 year. It gave 121.62% positive return in the past 3 years.

Disclaimer - The stock has been picked from the brokerage report of IDBI Capital. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.