In this post we can analyze IRCTC Multibagger Stock potential using Warren Buffett method of Multibagger Analysis.

Corona Situation

The current corona situation has caused recession & thereby severely affected the Tourism & Hospitality sectors. People have halted unwanted travels & leisure.

Tourism & Hospitality Sector

Corona has impacted the Tourism sector badly. Due to the impacts it can take another 1-2 year to fully restore the business OR depending on as fast the Corona Virus cure arrives in form of medicines/vaccines.

Indian Railway Catering & Tourism Corporation Ltd

NSE Code	IRCTC.NS
BSE Code	542830
URL	https://www.irctc.com/
CMP	1400
Free Report	Yes
Publish Date	Jul-3-2020

About Company

Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) is a Central Public Sector Enterprise under Ministry of Railways, Government of India. IRCTC was incorporated on 27 September, 1999 as an extended arm of the Indian Railways to upgrade, professionalize and manage the catering and hospitality services at stations, on trains and other locations and to promote domestic and international tourism through development of budget hotels, special tour packages, information & commercial publicity and global reservation systems. It is fully subscribed by Ministry of Railways, Government of India. It’s registered and Corporate Office is situated at New Delhi.

The company generates revenue through e-Ticketing website & apps, Rain Neer drinking water, Tourism Packages.

Warren Buffett, Value & Growth Checklist

Following are the Checklist parameters we applied on IRCTC.

Capitalization	21000 CR – Average for giving multibagger returns.
History of Consistently Increasing Sales, Earnings & Cash Flow	Moderate
Durable Competitive Advantage	Moderate
Future Growth Drivers / Sector Growth	Future Growth after Corona Troubles is anticipated to be 10% based on past years average
Conservative Debt (long term debt < 3 Net Profit)	Huge Debts as in Banking Sector
Debt Equity Ratio, Current Ratio	Huge Debts, But Current Ratio is Good
Return on Equity must be Above Average	10%
Low CAPEX required to maintain current operations	No
Management is holding / buying the stock	No Promoter holdings
Market Price < Intrinsic Value	Intrinsic Value Discount is just at 20% up due to Low EPS Growth. Intrinsic Value Calculator
Stock Price is consolidating (now)	Yes.
Stock Price is growing in past years along with EPS growth	Yes
Consolidated PE, PB Ratio, PEG Ratio	PE is good. PB is good. PEG is good.
Cash Flow Positive, Net Profit % greater than 8%	Positive
Paying Dividends, Tax	Not clean. Fraud Analysis required.
EPS Growth Rate	Recent Growth is not there.
Expected Gain in 5 Years	Can’t Predict as company is in loss of 651 crores currently.
Power of Brand	Good.
Corporate Governance, Reputation of Leaders	Good
Fraud reported	No

Positive Factors

Based on the above evaluations here are the positive factors regarding IRCTC

• Company is having Good Growth potential
• Company is debt-free
• Corona times not impacted the Revenue & Profit of the company much
• Good Dividend Payer
• Huge growth potential in Ticket Booking for Train & Airlines
• Huge growth potential in Catering, Drinking Water Manufacturing business

Concern Factors

Here are the concern factors regarding IRCTC

• As you can see the company is Over valued
• No Intrinsic Value discounts (Maruti traded at BMW cost)
• Value Investors may not enter this company, for instance
• Company does not have High Reputation on the area of service – Website is troublesome, Apps are not impressive
• Company Profitability can get affected by Government Regulations
• New Entrants into Catering & Online Booking business is a Threat

Summary

Based on the above analysis I would to say that the IRCTC DOES NOT have multibagger properties as per Value Investing. If the Valuation change in near future we will change this report.