Target: ₹870
CMP: ₹759.55
Indian Railway Catering and Tourism Corporation (IRCTC) reported strong growth (15 per cent/10 per cent, q-o-q/y-o-y) mainly led by catering and tourism (major uptick in luxury train segment). The management expects this momentum to continue ahead on the back of increasing partnership with food aggregators and increase in number of trains such as sleeper Vande Bharat and Bharat Gaurav trains (luxury which has high share of revenue for the segment).
Meanwhile, Internet ticketing is expected to stabilise at the same levels (margin at 84 per cent) due to saturation in terms of market share. The management is taking required actions by improving the non-convenience revenue to improve segmental margin which would, in turn, reflect in sustaining the overall margins. The company is building new infrastructure for base kitchen to improve the market share and increasing partnerships with food aggregators. IRCTC is planning to expand with three new plants for rail neer in FY26 which would increase the capacity.
With predominant market share and the management’s efforts in improving the top-line we remain positive. Due to sharp correction in the stock prices in recent time, we upgrade our rating to Buy from Hold with a TP of ₹870 (41.4x FY27E EPS).