IRCTC Ltd – the railway catering and tourism company – is eyeing better margins in the catering business with introduction of more premium train additions, that include Vande Bharats, Duronto and others.

The company is eyeing 15 per cent catering margins in FY25, as it looks to target more mail and express trains that “run over 12 hours and are day trains”.

“We have already introduced our cluster system ... and this is giving confidence to our licensees to share more revenue with us .... It’s a long-term contract being given to them. More Vande Bharat trains are coming. So premium trains are certainly giving us a better revenue than the non-premium trains,” Sanjay Jain, CMD, IRCTC said during a recent analyst call.

“...very hopeful of getting more percentage of revenue, while the number of trains or prepaid trains increase,” he added.

Addition of new trains will help increase license fees and drive catering in the coming years. This will be complemented with sustained internet ticket bookings (84 per cent of online Railway ticket booking done through IRCTC portal) and higher Rail Neer (its bottled water plant) revenues where new plants are being put up.

“We have to eye for trains which are running for more than 12 hours and day trains. So those are our target group. And accordingly, we are serving them,” Jain said.

The company in its annual report mentioned that it was catering to over 1,200 trains – 117 prepaid ones, 440 mail express and 700-odd through train-side vending (pantry cars). Nearly 12 per cent of its ₹1,000 crore catering revenues for FY24 came from Vande Bharat trains only.

IDBI Capital in a recent report said, in the near term, IRCTC’s revenue growth is likely to be driven by short term triggers like festive season, addition of static catering, tie ups with Zomato and new premium trains.

Q1 performance

There has been a 35 per cent y-o-y growth in e-catering services with total 19 aggregators across the country.

Incidentally, IRCTC saw subdued performance across segments like tourism and internet ticketing for Q1FY25, despite record profits of ₹308 crore in the period.

Revenues in tourism were down 38 per cent q-o-q. The segment was impacted by non-operation of trains (prepaid and premium), primarily due to the general elections in April and May.

Internet ticketing revenues de-grew by 4 per cent q-o-q. Impact on revenue (in internet ticketing) was due to seasonality in Q4 of advance booking for summer season, officials explained.

In case of Rail Neer - bottled water segment – there was a 34 per cent q-o-q during April – June period; with capacity utilisation at 86 per cent. A new plant with 72,000 bottle per day capacity will get commissioned in Vijaywada, Andhra Pradesh by October.

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