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Why IRCTC can't earn a 'buy'
Mint Hyderabad
|December 25, 2024
Slowing speed
Indian Railway Catering and Tourism Corp. Ltd's (IRCTC) shares hit a new low for 2024 at ₹777.20 on Monday and are hovering near those levels. The stock's lacklustre performance over the past three years is a reminder that companies, even in monopoly businesses like IRCTC in railway ticket booking, do not see a linear rise in profit and market capitalization.
This applies more so if the monopoly business is government-owned, which means there are higher chances that it will not be allowed to make windfall profits and will face challenges in cost-cutting through manpower rationalization.
As IRCTC would find it difficult to raise ticket-booking charges, it has to rely on volume growth and ancillary businesses. While volume growth has its constraints, ancillary businesses have not done enough to please its investors.
This story is from the December 25, 2024 edition of Mint Hyderabad.
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