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Should You Invest in IRCTC After Its Blockbuster Listing?

Screen grab of the IRCTC website.

Screen grab of the IRCTC website.

Market analysts were expecting a strong listing, but a higher-than-expected jump in the stock price on the first day of trade itself has raised some concerns over the near-term outlook for IRCTC shares.

State-owned Indian Railway Catering and Tourism Corporation (IRCTC) made a sensational debut on stock exchanges on Monday, with the stock rallying over 132% from its issue price. Market analysts were expecting a strong listing, but a higher-than-expected jump in the stock price on the first day of trade itself has raised some concerns over the near-term outlook for IRCTC shares. If you unclear on how to trade the stock now, here’s what analysts suggest:

— Manali Bhatia of Rudra Shares and Stock Brokers said: “If investors got allotment in IPO, (they) can opt for ‘add more’ strategy. Otherwise, new investors can buy from the open market up to the level of Rs 500-525, as we expect it will give consistent returns in the long run and could well be a multi-bagger…we maintain a positive outlook on the stock.”

— Astha Jain, senior research analyst at Hem Securities, recommended investors to hold the stock partially and to book profit in the remaining quantity.

— Prashanth Tapse, AVP Research at Mehta Equities, also suggested profit-booking. Tapse said the reason for profit booking would be highly stretched valuation from 18x (on issue price) to 30x (on listing) price-earnings ratio. “IRCTC could be considered a good portfolio stock if accumulated in good quantity at decent lower levels around 20% from the list price.”

— Sameer Kalra, founder of Target Investing, said: “IRCTC does have a bright future, as it has a monopoly kind of business. But the valuations seem to have spiked and it will see ups and downs in the coming future. I would recommend a ‘reduce’ recommendation in the stock if it goes down.”

— G. Chokkalingam, founder and managing director of Equinomics Research and Advisory, said the listing gains of IRCTC were more speculative than fundamental. He also believes that the stock may fail to give expected gains in the near term because of its valuations.

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