On track or off the rails? IRCTC’s Q4 earnings and investor sentiment

The Indian railway system is considered crucial for the economy. Indian railways extend across thousands of kilometres, effectively encompassing the entire nation, positioning it as the fourth largest railway network globally, following the US, China, and Russia. 

Operating within this massive enterprise, the Indian Railway Catering and Tourism Corporation (IRCTC) plays an essential part in coordinating a wide range of services, including catering, tourism, and online ticketing operations.

This article delves into the intricacies of IRCTC’s Q4 results and the subsequent reaction from the market.

About IRCTC

The IRCTC was founded on September 27, 1999, as a subsidiary of the Indian Railways. Its main responsibility is to improve and oversee the catering and hospitality services at railway stations and on trains. In addition, IRCTC has the responsibility of promoting both domestic and international tourism.

It operates intending to deliver top-notch services with unique tour packages and a worldwide reservation system to make travel easier. The organisation also prioritises information dissemination and commercial publicity to enhance tourism.

IRCTC, being a “Mini Ratna (Category-I)” Central Public Sector Enterprise, has an authorised capital of ₹250 crores and a paid-up capital of ₹160 crores. The company’s registered Corporate Office is situated in New Delhi, acting as the central hub for its operations.

IRCTC plays a vital role in the modernisation and professionalisation of travel and hospitality services within the Indian Railways, ultimately enhancing the overall railway experience for passengers.

In 2021, the IRCTC share split date marked a significant adjustment in the company’s stock structure. The face value of IRCTC shares underwent a division, reducing from ₹10 to a mere ₹2. This change took effect in the market on October 28, 2021, with the shares being traded on the basis of the new split value from that day forward.

The market capitalisation of Indian Railway Catering & Tourism Corporation Ltd is ₹84,308.00 crore, as of May 29, 2024. 

IRCTC quarterly performance

Here are the key financial metrics reflecting the company’s quarterly performance in relation to the previous quarter:

IRCTC’s financial outcomes fell short of market forecasts. Analysts at Prabhudas Lilladher had projected a net profit of ₹306.5 crore, indicating a 21.2% increase from the previous year, albeit a slight 2.5% dip from the preceding quarter. They also anticipated a 17.2% annual rise in Net Sales, with a modest 1.1% growth from the last quarter, reaching a target of ₹1,130.8 crore.

Also read: GE Power India Q4 results analysis: Share price insights 

IRCTC annual performance

Here are the key financial indicators of the company as compared to the preceding year:

For the fiscal year 2024, the board of IRCTC has sanctioned a final dividend payout amounting to ₹4 for each share. This represents a 200% return on the paid-up capital, which has a nominal value of ₹2 per share. This declaration comes on top of the provisional dividend of ₹2.50 per share (125% of the paid-up capital) that was announced earlier in November 2023.

Also read: Talbros Automotive Components Q4 FY24 results: A stock worth considering? 

Market reaction – IRCTC shares news

Now, let’s look at the reaction on IRCTC share after Q4 results:

After the result announcement on May 28, 2024, IRCTC’s share price on NSE dipped by -2.47% intraday from ₹1,105.00 to ₹1,077.75. 

Looking at the IRCTC share price history for the past 5 years, the IRCTC share price has given a return of 570.28%.

IRCTC share price target:

Currently, the stock is being traded at a multiple of 66.1 times the projected earnings for FY25 as estimated by analysts at Prabhudas Lilladher. The stock maintains a HOLD rating from these analysts, with a set target price of ₹825 per share. 

As per the consensus estimate, the share price target of the company is ₹838.67, which indicates a downside of -19.58%.

Also read: Gandhar Oil Refinery Q4 results: Analysing revenue and profit trends 

Peer analysis

While IRCTC stands unique in its offerings and holds a monopoly in Indian railway catering, there are other entities that operate in parallel domains, providing complementary services. Let’s compare the key financial ratios of IRCTC Ltd with that of its competitors:

Bottomline

The Indian Railway Catering and Tourism Corporation (IRCTC) continues to play a pivotal role in enhancing the travel experience within India’s vast railway network. Established in 1999, IRCTC has been instrumental in modernising and professionalising the catering, tourism, and online ticketing services of the Indian Railways. 

Despite its integral role and significant market presence, IRCTC’s recent Q4 FY24 financial results have been a mixed bag, reflecting both achievements and challenges.

IRCTC is navigating through a period of cautious optimism. Analysts have maintained a HOLD rating on the stock. The company’s robust market capitalisation of ₹82,980 crore and its strategic role within the Indian Railways’ ecosystem provide a solid foundation for future growth.

Despite facing immediate hurdles in profitability, IRCTC’s robust yearly expansion, strategic dividend distributions, and essential contribution to the Indian railways’ advancement initiatives secure its prospects for enduring growth over time.