IRCTC Stock Drops 5% After Disappointing Q4 Results; Prabhudas Lilladher Maintains ‘Hold’ Rating

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) fell nearly 5% on May 29 after the company’s fourth-quarter results didn’t meet expectations.

Q4 Financial Performance

• Net Profit: Increased by 2% year-on-year to Rs 284 crore, driven by higher ticket sales.
• Revenue: Grew by 20% year-on-year to Rs 1,154.8 crore.
• EBIDTA (Earnings Before Interest, Tax, Depreciation, and Amortization): Rose by 3.4% year-on-year to Rs 402.96 crore.
• EBIDTA Margin: Dropped to 34.89% from 36.8% in the same period last year.

The lower margin was due to higher contributions from lower-margin segments like catering and tourism compared to internet ticketing.

Company Overview

IRCTC is the only company authorized by the Indian government to provide online railway tickets, catering services, and packaged drinking water at railway stations and trains in India. Over the years, IRCTC has expanded its services to include luxury train tours, hotel bookings, and holiday packages.

Dividend and Shareholding

• Final Dividend: Rs 4 per share for the financial year 2023-24, totaling Rs 256 crore. This is in addition to the interim dividend of Rs 2.50 per share declared in November 2023.
• Ownership: As of March 31, 2024, the Indian government owns 62.4% of IRCTC. Foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) own 7.1% and 10.5%, respectively, while retail shareholders own 20%.

Stock Performance and Analyst Rating

At 9:28 am on May 29, IRCTC shares were trading 4.7% lower at Rs 1,034.70 on the National Stock Exchange. Prabhudas Lilladher retained a ‘Hold’ rating on the stock with a target price of Rs 825, noting that the stock is currently trading at 66.1 times their FY25 estimated earnings per share (EPS).

Prabhudas Lilladher will provide more details after an analyst call. Despite the recent drop, IRCTC stock has risen about 16% this year, outperforming the benchmark Nifty 50, which has gained nearly 5% in the same period.