IRCTC Stock Falls 5% After Q4 Numbers Miss Street Estimates; What Should Investors Do?

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) slumped nearly 5 per cent on May 29 after the company’s topline and bottomline for the fourth quarter missed Street estimates.

The railway PSU stock declined 5.16 per cent to the day’s low of Rs 1,027.15 on NSE in morning deals.

On Tuesday, IRCTC, the only firm authorised by the Indian Railways to manage food services onboard trains and provide online railway ticket booking services, posted a consolidated net profit of Rs 284.2 crore for the quarter ended March 31, up 1.9 per cent on a year-on-year basis. IRCTC’s quarterly revenue grew to Rs 1,154.8 crore from Rs 965 crore a year ago, according to a regulatory filing.

IRCTC’s earnings before interest, tax, depreciation and amortization (EBIDTA) for the quarter grew 3.4 percent YoY to Rs 402.96 crore and EBIDTA margin came in at at 34.89 percent as compared to 36.8 percent in the year-ago period.

The decline in margin was due to the higher contribution of other segments such as catering, and tourism, which are low-margin segments in comparison with internet ticketing.

The PSU board recommended a final dividend of Rs 4 per share, constituting 200 per cent of the paid-up share capital, with a face value of Rs 2 each for FY24, subject to shareholder approval.

The margin was recorded at 31.4 per cent in Q4FY24, down 220 basis points from 33.6 per cent in the same quarter of the previous year.

The contribution of internet ticketing to overall revenue dropped to 31 per cent from 32.8 per cent the previous year and 37.1 per cent in FY23. IRCTC’s catering business expanded by 34.1 per cent to Rs 530.8 crore.

The shares of the company have zoomed 47.6 per cent in the last six months, whereas the stock has rallied over 60 per cent in the last one year.

IRCTC is an Indian public sector undertaking responsible for offering ticketing, catering, and tourism services in partnership with the state-owned Indian Railways.

Prabhudas Lilladher maintained a ‘Hold’ rating on the stock with a target price of Rs 825. The stock currently trades at 66.1x the brokerage’s FY25E EPS estimate.

“We shall come back with more details post the analyst call,” said PL in a note.