Brokerage firm Prabhudas Lilladher initiated coverage on IRCTC (Indian Railway Catering & Tourism Corporation Ltd) with a ‘buy’ rating and a target price of Rs 1,339 per share, an upside of 33 percent.

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The stock trades 75.6 percent higher from its listing on October 14, 2019. It was listed at Rs 644 on the BSE, a 101.25 percent premium over its issue price of Rs 320 per share.

The company enjoys a monopoly position in providing online ticket booking and catering services for passengers traveling by Indian Railways.

Prabhudas Lilladher expects tourism revenue to grow at a CAGR of 9.1 percent and EBIT at 2.9 percent over FY19-22 as IRCTC has footprints across all major tourism segments such as hotel bookings, rail, land, cruise and air tour packages and air ticket bookings.

The company has a dominant position in online rail bookings and packaged drinking water with 73 percent and around 45 percent market share respectively.

“Strong balance sheet, healthy return ratios and 45 percent dividend pay-out give us additional comfort,” the brokerage said.

It expects IRCTC’s RoE and RoCE to expand from 27 percent and 34 percent in FY19 to 44 percent and 52 percent in FY22 respectively.

Going ahead, policy uncertainty in catering and reduction or abolishment of service charge will remain key risks, it added.

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