IRCTC (Hold) – The Hindu BusinessLine

IRCTC reported subdued performance with revenue growing 4 per cent q-o-q and 10 per cent y-o-y

Target: ₹836

CMP: ₹755.85

IRCTC reported subdued performance with revenue growing 4 per cent q-o-q and 10 per cent y-o-y, primarily due to seasonal softness in the catering segment (-5 per cent q-o-q) and a flat performance in Rail Neer.

Operating margin contracted by 350bps, driven largely by a 230bps decline in internet ticketing margins. However, management remains optimistic about the growth prospects from premium trains like Bharat Gaurav, Maharaja Express, and Tejas Express, as well as expanding non-railway revenue (28 per cent share) and tourism momentum, particularly from religious travel and additional rakes. Furthermore, the RBI approval for a payment aggregator license is expected within a quarter, could bolster revenues from FY27 onward.

Addition of new trains and circuits and increase in license fees is expected to drive catering in the coming years. The company is building new infrastructure for base kitchen to improve the market share and increasing partnerships with food aggregators.

Despite near-term margin pressures, we remain aligned with the management’s long-term view and baked in a 12 per cent revenue CAGR for FY26/27. Due to limited near term catalysts coupled with the rising pressure at the operating level (due to internet ticketing started moderating), we value the stock at 44x EPS FY27E and downgrade from ‘Buy’ to ‘Hold’ rating with a TP of ₹836.

Published on May 30, 2025