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IRCTC Share price review: All you need to know

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IRCTC Share / Stock price | Fundamental Analysis of Stocks
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IRCTC, Indian Railway Catering, and Tourism Corporation Limited is a prominent player in e-commerce and leading catering and hospitality services. In addition, an extended arm of Indian Railways, IRCTC share price, has given superior returns to investors in all scenarios- post-listing gains, capital gains, and dividends.

Overview of IRCTC

It is one of the market’s top-performing PSU stocks, and many analysts have a favorable long-term growth outlook. Listed in October 2019, IRCTC’s stock has given tremendous returns to its investors. In a short period, IRCTC share price made a peak of ₹6,375.45 on 19th October 2021, against its issue price of ₹320. The stock was split in a 10:2 ratio on 28th October 2021.

IRCTC is an exciting company to know about, as it touches the lives of every Indian in some way. This blog article will look at the long-term growth outlook of IRCTC share price, its business performance, key financial metrics, and other parameters that will help you decide on your investments.

History of IRCTC

IRCTC is synonymous with online ticket booking in Indian Railways for all passenger, express, and premium trains across the country. A Miniratna (Category-I) central public sector enterprise under the Ministry of Railways, Government of India, IRCTC was incorporated in 1999 to upgrade, professionalize, and manage the catering and hospitality services at railway stations, and on trains and promote domestic and international tourism.

The company’s core activities include catering and hospitality, internet ticketing, travel and tourism, and packaged drinking water- Rail Neer.

IRCTC commenced online ticket booking services in 2002 and has consistently moved up the ladder regarding business and financial performance. In 2017, IRCTC ranked in Fortune India Next 500 list of Indian companies.

Being the only authorized entity to sell online tickets to railway passengers, IRCTC is one of the most logged websites in the Asia Pacific region, with 25 million monthly visits and 6.27 million daily logins. It sells over 80% of all reserved rail tickets in India. A zero-debt company, in FY 2022, its revenue from operations was ₹1,879.48 crores.

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IRCTC Business Performance

IRCTC primarily has four business segments- catering, internet ticketing, travel and tourism, and packaged drinking water through which it earns revenue. Let’s look at the performance of each business segment individually.

Catering

IRCTC is India’s leading hospitality enterprise, serving railway passengers through its different service units- mobile catering, static catering, other hospitality businesses, and e-catering.

  • Mobile catering business includes serving railway passengers in premium trains, mail/express trains, and station-side vending.
  • Static catering business includes serving railway passengers through Food Plazas, Jan Ahaar, base kitchens, cell kitchens, and refreshment rooms set up in railway stations.
  • Other hospitality businesses include executive lounges, retiring rooms, Rail Yatri Niwas/ BNR, and hotels.
  • And e-catering is a new service for railway passengers with reserved tickets to order food from their favorite restaurants online.

This segment contributes 27% of total revenue in FY 2022.

Packaged Drinking Water

The business unit was set up in 2003 by setting up the first Rail Neer plant at Nangloi, New Delhi. Today, it is one of India’s most sought-after packaged drinking water brands. It has 15 bottling plants across India, and in FY 2022, it produced 19.86 crores of bottles. This segment contributes 9% of total revenue in FY 2022.

Travel and Tourism

IRCTC offers multiple services under this segment, including air ticketing, hotel & tourism packages, railway tourism, and other travel-related services. Some special trains IRCTC runs include Maharaja Express, Golden Chariot, Bharat Darshan, Ramayana Yatra, etc. This segment contributes 8% of total revenue in FY 2022.

Internet Ticketing

This segment is the cash cow for IRCTC as it contributes to more than 50% of the total revenue. In FY 2022, the internet ticketing segment contributed 54% to the total revenue. And the total value of all railway tickets booked through the platform is ₹ 38,178.32 crores in FY 2022.

IRCTC Management Team

The Chairperson & Managing Director, Smt. Rajni Hasija leads the company’s management team. She has been on the board since May 2018 and is an officer from the 1989 Indian Railway Traffic Service (IRTS) batch. She has worked in several divisions in her 32-year career in Indian Railways. She has managed important business segments of IRCTC, including IT, marketing, and operations, playing a crucial role in the inception and development of IRCTC’s online ticketing site.

Shri Ajit Kumar is the Director (Finance) & CFO and an officer of the 1989 Indian Railway Account Service (IRAS) batch. Debashis Chandra is the Director (Catering Services) and an officer of the 1993 Indian Railway Traffic Service (IRTS) batch.

IRCTC Financial Performance

Revenue

IRCTC has managed to reverse the impact of a pandemic on the business and is close to surpassing the revenue level of FY 2019-20 in the current fiscal, indicating a pickup in travel demands.

In FY 2022, revenue from operations came in at ₹1,879.48 crores, compared to ₹776.66 crores in FY 2020-21, up by 142%. In the June quarter of FY 2022, IRCTC posted revenues of ₹852 crores, a 250% year-on-year growth.

Segment-wise, the revenue share

SegmentsRevenue Share (%) FY22
Catering Services27
Internet Ticketing54
Rail Neer9
Travel and Tourism8
State Teertha (new)1.6

EBITDA

In FY 2022, EBITDA was ₹953.56 crores, up by 250% from ₹272.74 crores in FY 2020-21. Looking at the segment-wise profits, the internet ticketing business contributed ₹870.19 crores, Catering Services contributed ₹26.02 crores, and State Teertha contributed ₹2.97 crores to the profit. While the Rail Neer and Travel and Tourism business segments made losses of ₹14.68 crores and ₹46.13 crores, respectively.

Profit after tax (PAT) in FY 2022 jumped 255% to ₹663 crores. And, in the June quarter of FY 23, PAT came in at ₹246 crores, up from ₹83 crores in Q1 of FY 22.

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IRCTC Key Ratios

Interest coverage ratio: During FY 2022, the interest coverage ratio improved from 10.86 in FY 2021 to 27.77 times due to an increase in EBITDA.

Current ratio: The current or liquidity ratio for the financial year ending on 31st March 2022 stands at 1.86 times compared to 1.76 times in the previous year, an increase of 6.25%.

Debt-equity ratio: The Company has almost zero debt on its book, and the debt-to-equity ratio stands at 0.06x, reflecting a solid balance sheet position.

The EBITDA margin is a significant financial metric that shows how much the company keeps after deducting all the operating expenses. For example, EBITDA margin for FY 2022 stands at 50.74%, from 35.12% recorded in FY 2021. It means the company can keep almost 50% of the revenue as profits before adjusting for depreciation, taxes, and interest cost. As a result, an increased income level can result in a higher EBITDA margin.

Net profit margin: The net profit margin for FY2022 is at 35.31%, meaning the company is keeping almost 35% of its revenue after meeting all the expenses.

Fundamental Analysis of Stocks

IRCTC Share Price Analysis

IRCTC IPO opened for subscription on 30th September 2019 to raise ₹645 crores from public investors. At the close, the IRCTC IPO was oversubscribed by 111 times, receiving bids for 225.29 crore shares against the IPO size of 2.016 crore shares.

On the day of listing, IRCTC share price debuted at ₹ 644, 115% over the issue price. The stock split in October 2021, and the current face value of its share is ₹2. The IRCTC share price has seen a CAGR of 63% in the last three years.

image 20
IRCTC share price history   Source: tradingview 

 Since listing, IRCTC share price has shown a consistent upside movement, moving from a split-adjusted value of ₹125 to an all-time high level of ₹1,279. The IRCTC share price is updated after factoring in the stock split.

Dividend Payout

IRCTC is a consistent dividend-paying company, and in FY 2022, the company paid ₹3.5 as a total dividend, and in FY 21, it paid ₹7.50 as a dividend to shareholders.

IRCTC Share Price Target

The company has solid fundamentals and a consistent revenue stream from sources like catering services and internet ticketing for Indian Railways, in which it has a monopoly.

For instance, IRCTC charges ₹15 as a convenience fee per ticket in the non-AC category and ₹30 in the AC category. Although the pandemic crippled the travel economy, it resulted in higher online ticket booking on the IRCTC platform. In FY 2022, IRCTC’s mobile and web app booked 80.43% of the total reserved tickets and booked 1.14 million tickets per day.

With Indian Railway’s focus on improving profitability by introducing more 3-AC economy coaches, 400 Vande Bharat trains in the next three years, and corporate trains, IRCTC’s revenue from internet ticketing will witness a steep increase and EBITDA too. It will translate to growth in the IRCTC share price in the long term.

Compared to any other business, IRCTC share price is less likely to be affected by market volatility due to its unique business proposition.

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IRCTC Share Price Target- Brokerage Research Report

IDBI Capital

In the research report dated 11th August 2022, the brokerage house gave a “BUY” call for IRCTC with a share price target of ₹ 804 in the short term. The rationale behind the buy recommendation is robust revenue growth. In addition, the company will benefit from increased license income from catering, revenue from internet ticketing to remain strong, and the tourism margin may also improve.

The primary highlight of the report is the recovery in catering and Rail Neer business to pre-COVID levels and strong growth in the tourism business, which saw strong growth of 44% in Q1-FY 2023 compared to the previous quarter. 

Prabhudas Lilladher

In the research report dated 11th August 2022, the brokerage house recommended a “HOLD” rating with an IRCTC share price target of ₹635. The target price is already met, and the rationale behind the HOLD rating is due to solid growth in the top-line in Q1, FY 2023, which was above Prabhudas’ estimate of 18% and consensus estimate by 16% to solid beat the catering front.

However, the report has also raised concerns about the absence of meaningful growth levers in the long term, as saturation in existing business segments can make the IRCTC share price valuation expensive.

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IRCTC Share Price Future Growth Potential

At present, the key focus is the recovery of the catering and tourism business to pre-pandemic levels, which are performing below expectations. Some of the key reasons that can improve the financials of the company and increase IRCTC share price are:

  • Reach and distribution
  • Stable and monopolistic business segments
  • Good return on equity (ROE) track record for last three years at 31.6%
  • Government support through policy decisions
  • Pick up in travel demand and high disposable income

The company experienced a kind of threat in its business operations during the pandemic; however, that situation is now less likely to happen anytime soon. Nevertheless, as mentioned in the Prabhudas Lilladher research report, the absence of meaningful growth levers can impact IRCTC share price in the future.

The details shared above are based on the quarterly and annual reports of IRCTC, Indian Railway Catering, and Tourism Corporation Limited, meant for information purposes only. However, we suggest doing your due diligence before you make investment decisions.

Disclaimer Note: The numbers and data mentioned in this article are only for information purposes. He/she should not consider this a buy/sell/hold from Research & Ranking. The company shall not be liable for any losses that occur.

FAQs

How has the IRCTC share price performed in the last three years?

In the last three years, IRCTC share price had a CAGR growth is 63%. Since its listing in October 2019, IRCTC share price has outperformed the market and is one of the top-performing PSU stocks.

What is the market capitalization of IRCTC?

At the current IRCTC share price of ₹ 758, the market capitalization is ₹60,692 crores. On 14th October 2019, the listing date, IRCTC’s market capitalization was ₹ 11,622 crores.

What is the top-performing business segment of IRCTC?

The top-performing business segment of IRCTC is internet ticketing and catering services, which contribute 54% and 27% to the total revenue.


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