Reviews

In this edition, we have reviewed International Conveyors Ltd. and IRCTC Ltd. We suggest our reader-investors to HOLD International Conveyors Ltd. and IRCTC Ltd. 

We had recommended International Conveyors Ltd. in Volume 39, Issue No. 4 dated January 15, 2024 — January 28, 2024, under the ‘Low Price’ segment. The recommended price for the stock was ₹88.50. We had recommended the stock focusing on new applications like electric vehicles, renewables and defence, with growing demand from end-use industries and technology development. 

International Conveyors Ltd. (ICL), founded in 1973 in Kolkata, India, is a leading global manufacturer of solid woven fabric reinforced PVC-impregnated and PVC-covered fire-retardant conveyor belting. With a 45 per cent share of the Indian PVC mine conveyor belt market, ICL has demonstrated global competitiveness. The company produces and exports PVC belts to the USA, Canada, South Africa and Australia. 

In Q1FY25, on a consolidated basis, its revenue decreased by 5.32 per cent YoY to ₹40.39 crore compared to ₹42.66 crore from the previous year’s same quarter. On a sequential basis, its revenue increased by 55.59 per cent. The PBIDT excluding other income decreased by 6.29 per cent to ₹5.66 crore YoY compared to ₹6.04 crore from the previous year’s same quarter, while sequentially increasing by 170.81 per cent. 

The net profit stood at ₹31.87 crore compared to ₹14.11 crore, a YoY increase of 125.87 per cent, while sequentially increasing by 425.04 per cent from ₹6.07 crore. At TTM, the shares of International Conveyors are trading at a PE of 6.44 times, which is lower than its three-year median PE of 16 times, whereas the industry PE stands at 51.5 times. If we look at its PBV, it is currently at 1.90 times, which is lower than the industry PBV of 2.94 times. The company has a three-year average return on equity (ROE) of 16.5 per cent and a return on capital employed (ROCE) of 18.4 per cent. 

ICL, a company with a long history in the industry, is a major producer of solid woven PVC conveyor belts for underground mines like coal and potash. The company's growth is linked to the growth of underground mining operations. Coal India Limited is the major client of ICL in the domestic market. Exports accounted for 63 per cent of the total conveyor belt sales in FY24, compared to 84 per cent in FY23. The outstanding order book stands at ₹15.13 crore as of June 30, 2024. The company's growth is attributed to the growth of underground mining operations and the growing demand for PVC conveyor belts. Hence, we recommend HOLD. 

We had recommended IRCTC Ltd in Volume 39, Issue No. 5 dated January 29, 2024 — February 11, 2024, under the ‘Analysis’ segment. The recommended price for the stock was ₹970.75. We had recommended the stock focusing on capturing more market share, growth driven by the government’s investment in railway infrastructure and strong fundamentals. The Indian Railway Catering and Tourism Corporation Limited (IRCTC) was incorporated in 1999 as a public limited company under the Companies Act, 1956. 

As a central public-sector enterprise, IRCTC is authorised by the Indian Railways to provide catering services, online railway tickets, and packaged drinking water at railway stations and trains in India. The company aims to upgrade, modernise, and professionalise catering and hospitality services, manage hospitality services at railway stations, and promote international and domestic tourism through public-private participation. In Q1FY25, on a consolidated basis, its revenue increased by 11.82 per cent YoY to ₹1,120.15 crore compared to ₹1,001.79 crore from the previous year’s same quarter. 

On a sequential basis, its revenue decreased by 3 per cent. The PBIDT excluding other income increased by 9.31 per cent to ₹374.92 crore YoY compared to ₹342.99 crore from the previous year’s same quarter, while sequentially increasing by 3.44 per cent. The net profit stood at ₹307.72 crore compared to ₹232.22 crore, a YoY increase of 32.51 per cent, while sequentially increasing by 8.28 per cent from ₹284.19 crore. 

At TTM, the shares of IRCTC are trading at a PE of 62.5 times and PB of 23 times. The company has a three-year average return on equity (ROE) of 41.9 per cent and a return on capital employed (ROCE) of 54.8 per cent. The company has three-year sales and profit growth of 77 per cent and 94 per cent, respectively. 

The management is optimistic about future growth due to the government's investment in railway infrastructure, with a plan of ₹2.6 lakh crore for the current year. Catering margins are expected to stabilise with the introduction of premium and prepaid trains. The company has been upgraded from Schedule B to Schedule A, aiming for Navratna status. The company is also investing in capacity expansion, including a new Rail Neer plant in Vijayawada. It anticipates further growth in ticketing revenues from expanded services, including flights and buses. Hence, we recommend HOLD.