Why Warren Buffett would have bought IRCTC, and you should too on correction

IRCTC is the only entity authorised by the Indian Railways to provide online railway tickets, catering services to railways and packaged drinking water at railway stations and in trains.

We can say investors got another stock to add to their portfolio and be bullish on this stock in long-term and always buy from a correction.

Back in 2003, the government divested 25 per cent stake Maruti Suzuki (Maruti Udyog as it was known then) at Rs 125 per share. The stock debuted on the exchanges on July 09, 2003 and ended the first trading at Rs 164 levels, nearly 32 per cent higher than the issue price.

From its issue price, Maruti (MSIL) has zoomed near 7,000 percent to near Rs 10,000 in December 2017. It is now at 12th position at around Rs 2.21 lakh crore by market cap.

Comparing Maruti with IRCTC, we can say the government's divestment play was same, but the game can be different.

'The Market Discounts Everything' which means that over any period of time, all factors – those that have happened, are those expected to happen and could happen – are priced into the market. As things change, such as market risks, the market adjusts along with the prices, reflecting that new information.

From IRCTC’s future revenue generation strategy by levying a service charge of Rs 15 on tickets booked for non-air-conditioned coaches and Rs 30 for air-conditioned ones gives a clear view of its increasing earnings.

Based on parameters such as strong earnings profile, diversified business segment, healthy return ratios, debt-free status and monopoly business we are strongly bullish on this without any bias.

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