Trading at whopping 200 PE, is this monopoly sending out sell signals?

Trading at whopping 200 PE, is this monopoly sending out sell signals?

Stock Score, Analysts' Ratings & Recommendations EARNINGS FUNDAMENTAL RELATIVE VALUATION RISK PRICE MOMENTUM Stock score of Indian Railway Catering and Tourism Corporation Ltd moved down by 1 in a month on a 10-point scale. View Latest Stock Report

Stock Analysis Stock score of Indian Railway Catering and Tourism Corporation Ltd is 5 on a scale of 10. View Stock Analysis »

NEW DELHI: Two years back, when the government decided to sell its stake in Indian Railways Catering and Tourism Corporation () at Rs 320 per share, no one would have thought the stock would hit the Rs 4,000 mark in 23 months.True, it is a monopoly, with the sole right to book tickets for Indian Railways, and monopolies usually command premium valuations. But it would have been unfathomable to even the most bullish trader to expect over 12-fold returns.It is remarkable given the fact its business has suffered heavily due to the pandemic during most of the last two-year period. The rally has defied logic, and some analysts believe it may have gone too far.The stock now trades at a price-to-earnings multiple of 200, and price to book value of 40. Cutting the jargon, the stock is simply way too expensive, and probably running on just investors' exuberance.Understandably, the stock price has surpassed all one-year price estimates of analysts. Five analysts track the company, and their most bullish target was Rs 3,104. As of Monday’s close, the stock was nearly 20 per cent above that price.“In IRCTC, I find the valuation obnoxious. At peak, they made a profit of Rs 600-700 crore in 2019 and that profit will not come for the next two years. It is a steady business, but it is not a very high growth business,” said Sandip Sabharwal, an independent market analyst.IRCTC reported a net profit of Rs 189.90 crore on a revenue of Rs 783.05 crore during FY21 as per data available with BSE. This was a sharp drop from Rs 528.57 crore profit reported for FY20. The major reason was most trains were not running during the period.Now, things have improved a lot. Most of the trains have resumed services, with others in line. The company is a prime play on the reopening of the economy, along with top airline and tourism sector stocks.However, in the last couple of sessions, profit booking has begun. Short-term technical charts have also shown shorting opportunities. On Monday, on the daily price chart, the Heikin-Ashi candle changed from green to red, which is a bearish sign, said an analyst.The tone of fundamental analysts has also changed, with some suggesting booking profit at this price level. The earnings outlook of the company remains weak. In fact, in the last three months, at least three analysts have downgraded their price targets for IRCTC, data available on Refinitiv shows. In comparison, InterGlobe Aviation, which is the strongest airline in business, has seen two upgrades and one downgrade in the last 120 days.

Zee, IRCTC among 8 stocks under F&O ban on NSE today

As many as eight stocks/securities have been put under the futures and options (F&O) ban for trade by the National Stock Exchange (NSE) on Monday, September 27, 2021. These securities are banned under the F&O segment as they have crossed 95% of the market-wide position limit (MWPL), as per the NSE.

Indian Railway Catering and Tourism Corporation (IRCTC), Vodafone Idea, Punjab National Bank (PNB), Indiabulls Housing Finance, Escorts, Canara Bank continue to be under the F&O ban whereas two stocks - PSU metal company Steel Authority of India (SAIL) and media giant Zee Entertainment Enterprises Limited (ZEEL) have been added to the list for today.

The derivative contracts in the mentioned securities have crossed 95% of the market-wide position limit and are therefore have been currently put in the ban period by the stock exchange.

“It is hereby informed that all clients/members shall trade in the derivative contracts of said security only to decrease their positions through offsetting positions," the stock exchange said. “Any increase in open positions shall attract appropriate penal and disciplinary action,” NSE added.

No fresh positions are allowed for any of the F&O contracts in that particular stock when it is under the F&O ban period. The MWPL (market-wide position limit) is set by the stock exchanges, which is the maximum number of contracts that can be open at any time (Open Interest), therefore, the F&O contracts of that stock enter a ban period if the open interest crosses 95% of the MWPL.

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IRCTC, Vodafone Idea among stocks under NSE’s F&O ban list for today

As many as eight stocks/securities have been put under the futures and options (F&O) ban for trade by the National Stock Exchange (NSE) on Tuesday, September 21, 2021. These securities are banned under the F&O segment as they have crossed 95% of the market-wide position limit (MWPL), as per the NSE.

Under the F&O ban list, Indian Railway Catering and Tourism Corporation (IRCTC), Sun TV, National Aluminium Company (Nalco), Steel Authority of India Ltd (SAIL), Exide Industries, Punjab National Bank (PNB) continue to be among the stocks that were under the ban period in the previous session whereas telco Vodafone Idea has been added to the the list by the NSE today.

The derivative contracts in the mentioned securities have crossed 95% of the market-wide position limit and are therefore have been currently put in the ban period by the stock exchange.

“It is hereby informed that all clients/members shall trade in the derivative contracts of said security only to decrease their positions through offsetting positions," the stock exchange said. “Any increase in open positions shall attract appropriate penal and disciplinary action,” NSE added.

No fresh positions are allowed for any of the F&O contracts in that particular stock when it is under the F&O ban period. The MWPL (market-wide position limit) is set by the stock exchanges which is the maximum number of contracts that can be open at any time (Open Interest), therefore, the F&O contracts of that stock enter a ban period if the open interest crosses 95% of the MWPL.

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