Target: ₹822

CMP: ₹937.35

While Indian Railway Catering & Tourism Corporation’s top-line was broadly in-line with our estimates, operational performance was weak with EBITDA margin of 33.5 per cent (our estimation of 35.3 per cent).

We believe growth in internet ticketing division has plateaued with e-booking penetration at about 83 per cent and expectation of a mid-single digit growth in volumes over FY24-FY26. In addition, rising share of low yielding UPI transactions (45 per cent share in Q1-FY25) will limit the scope for margin expansion. While we have re-aligned our top-line estimates amid strong performance in catering division, our EPS estimates remain broadly intact given the segment commands lower margin.

During FY24, catering/internet ticketing division contributed 45/30 per cent to IRCTC’s top-line and 20/77 per cent to its EBIT. We believe scope for earnings surprise is limited given growth in high margin internet ticketing division has plateaued.

We expect sales/PAT CAGR of 11/12 per cent over FY24-FY26 and retain ‘Reduce’ with a TP of ₹822 (earlier ₹811) after assigning a multiple of 47.5x (no change) over FY26E EPS.