IRCTC Ltd

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About the Company

Indian Railway Catering and Tourism Corporation (IRCTC) is a Mini Ratna (Category-I) Central Public Sector Enterprise under the Ministry of Railways, Government of India. IRCTC was incorporated on 27th September 1999 as an extended arm of the Indian Railways to upgrade, professionalize and manage the catering and hospitality services at stations, on trains and other locations and to promote domestic and international tourism through the development of budget hotels, special tour packages, information & commercial publicity and global reservation systems.

Q3FY23 Updates

Financial Results & Highlights

Detailed Results:

1. The company’s revenue grew by 70% YoY and profits grew by 22% YoY.
2. EBITDA margin is 35.5% Vs 37.8% QoQ.
3. Internet Ticketing segment
   1. Revenue stable at 300 crore
   2. EBITDA margin of 84.2% versus 84.8% YoY
4. Catering segment
   1. Revenue of 394 crores up by 17.9% QoQ.
   2. EBITDA margin of 10.7% versus 10.6% QoQ
5. Rail Neer
   1. Revenue of 75.1 crores, an increase of 4.3% QoQ, and growth of 50% YoY
   2. EBIT margin of 11.8% Vs 7.5% QoQ 
6. Tourism segment
   1. Revenue of 147.8 crores, a rise of 49% QoQ 
   2. EBIT margins improved to 10.8%.
7. Cash and bank balance is 2,133 crore
8. Interim dividend stood at 3.5 Crs.

Investor Conference Call Highlights 

1. Due to the introduction of new trains in the mobile catering segment i.e. the pre-paid train tickets type, the margins are lower while the overall turnover is higher. This is leading to lower profit growth vis-a-vis sales growth.
2. The company is taking several steps to grow its catering biz such as a tie-up with 3rd party agents like Paytm, Goibibo, etc as well as using WhatsApp booking to aid growth & ultimately improve profitability.
3. The company has seen its opt-out of meal % in trains spike from 10% to 20% & is taking efforts to reduce this loss of revenue through initiatives like WhatsApp booking.
4. The total revenues from internet ticketing for 9M stood at 911 Crs where 604 Crs came from convenience & 307 Crs came from non-convenience.
5. No. of tickets booked per day in Q3 stood at 11.3 lakhs.
6. The management believes that due to the introduction of the Bharat Gaurav series which will add the number of rakes by 10, the number of tourist trains run per year will increase from 150 to 300 yielding an additional revenue of 200 Crs.
7. The company is witnessing an increase in the production cost of the Rail Neer because of the increase in the pet cost & is therefore planning about increasing the rates.
8. The management states that since the level of catering is expected to increase as a % of total revenues, the margins will be decrease.
9. The depreciation rates has reduced YoY due to a write back of provisions made before.
10. The profits of 9M for Tejas stood at 17 Crs.
11. The utilisation for Rail Neer stood at 70% & the company plans to commision two new plants in the current financial year.
12. Share of UPI stood at 32% & the company is targeting to increase the % of non-convenience to total internet ticketing from 33% to 50%.
13. The sleeper class contributed 44% of sales followed by third AC which is 26.8%, 13% is Second S and second AC is 6%.
14. The company is still in works with RBI regarding its observations on becoming a payment aggregator, & expects this divison to close the year with revenue of 81 Crs & profits of 12 Crs.
15. The management explains that it plans to grow the air & bus booking segment but also states that “ focusing only on the bus and air may not be appropriate because we are a mass tourism leader we have to see the masses first”.

Analyst’s View

IRCTC is a unique PSU with massive cash flows and a strong balance sheet. The company has delivered a strong quarter with a revenue rise of 70% YoY and its business model has once again proven its resilient nature to scale up. It remains to be seen how the company  will be able to scale its tourism biz as well a grow profitably given the expected increase in contribuion of catering segment where margins are lower compared to the ticketing segment. Nonetheless, given that IRCTC has a near-monopoly in its space and the resilient demand for its services and products in railway stations, IRCTC remains a good stock to watch out for investors betting on the railway’s theme.

Q2FY23 Updates

Financial Results & Highlights

Detailed Results:

1. The company’s revenue grew by 97% YoY and profits grew by 42% YoY.
2. On the QoQ basis, the Q2 was muted due to seasonality effects – low tourism in the quarter.
3. EBITDA margin is 37.8%, 20 bps improvement QoQ.
4. Revenue decline is driven by reclined in Catering business
5. Internet Ticketing segment
   1. Revenue of 300 crore, 13.2% growth YoY
   2. EBITDA margin of 84.2% versus 84.5% QoQ and 83.1% YoY
6. Catering segment
   1. Revenue of 334 crore down by 5% QoQ, YoY it grew 4.7 times.
   2. EBITDA margin of 10.6% versus 12% QoQ
   3. Decrease in revenue is due to less passangers travel during Q2.
7. Rail Neer
   1. Revenue of 72.1 crores, decline of 13.2% QoQ and growth f 75% YoY
   2. EBITDA margin of 7.5% versus 11% QoQ and 6.8% YoY
8. Tourism segment
   1. Revenue of 99.1 crores, decline of 13.9% QoQ and growth of 2.6 times YoY
   2. Loss in EBITDA due to less passenger travel in Tejas.
9. Cash and bank balance is 1900 crore
10. H1 profits for Tejas is 9.3 crores. Occupancy in Tejas was low in last 2 months, but in october it has gone up.

Investor Conference Call Highlights 

1. The sleeper class has contributed to 46% and 2As has been nearly 13%, average for, July, August, September. In this quarter, the overall percentage ticketing has been almost 82% instead of 81%, it is 81.93%. 
2. The number of ticket booked in the entire quarter has been INR 10.69 crores.Average is nearly INR 3.5 crores in each month. Revenue received in this particular quarter from the Ticketing Segment, convenience fee, is 200.32 crores.
3. In 450 trains the company has a pentry cars. And vending, where there is no pantry car, they are now 715 trains are there, where IRCTC has been able to place the contract. And nearly for the 200 more trains but tender is in the pipeline which is going to be finalized within a week or so.
4. The management stated September is considered as a lean period, October is a festival period. All festivals in the Eastern India, Northern India and the Western of India fallen in this period. So the company is going to have a good number.
5. Earlier the company used to have nearly 36 to 37 – 39% of the 2S booking. But as now it has now reduced to 13%. But the overall earning in the convenience fee in that segment has remained the same. Revenue from the convenience fee has been compensated by the volume gains of the festival booking, which is going to happen for the 120 days before.
6. The management stated margins in the Rail Neer has been impacted because petroleum prices have gone up. So the company can only gain by volume.
7. The management stated in Catering business, our margins are more or less same. The company is going to have a long-term contract — five years instead of short term contracts, there will be more margins. All tender of the TSG trains are gradually in the pipeline, 700 awarded, 200 in the pipeline…
8. The company has already opened Una plant and Simhadri plant for Rail neer, all licensing work has been done. And the first two bottles have been produced. The company is just refining the quality of the water over there. Once the quality of the water is settled, and because this is a unique kind of a plant where it is making water from steam, so it is an association with the NTPC Simhadri.
9. IRCTC capacity is to produce 15.52 lakh bottles a day. And other plants, Bhusawal, Bhubaneswar are going to be live this year. With this, there would be further adding two capacity of 1.44 lakh bottles. So that is going to be making capacity near 17.5 lakh bottle a day. And by the end of ’23 or the beginning of the very next fiscal, other two plants will also be there in final commissioning stage. So achievement of 18.4 lakh bottles a day would be achieved in the beginning of the next financial year.
10. Ticketing fee revenue in H1 is 601 crores, 67% of is from the convenience fee and 32% is from non-convenience fee.
11. 13% of total revenue is coming from the agent business and iPay is contributing 6% of the total revenue.
12. IRCTC has tied up with the Karnataka State Tourism, for operating their train. The company is also going to have a tie up with the other state government for operating their train
13. The management stated in Tourism, 7% to 8% margin is working in this segment as competition is high
14. In the hotel, the company is going to bring an aggregator, the moment it get an aggregator, hotel bookings are going to rise. And in the bus IRCTC is doing pretty fine, up to October rather, did a revenue of nearly INR 10 crores in the bus alone up to in this financial year and where have covered 22 states and state transport also tied up individually with eight transport also.
15. The management stated October to March is a season of travel. So luxury tourism also for Maharaja is on the track and is still running. Golden Chariot will start its first operation on 20th of November. And all other Deluxe train is going to be on the track very soon because things are now improving. They are also going to operate, revive our Baddish sector very soon.
16. Air ticketing segment booked, in the month of July, August and September, the company had booked around 1,29,000, 1,39,000, and 1,68,000 segments respectively. And the company has also increased convenience fee from INR 50 to INR 100. So income from booking gross booking amount has particularly been more and INR 5 crores revenue, is registered from this particular segment. It is a pure revenue commission.
17. Occupancy level in this particular financial year for the Ahmedabad Tejas is nearly 83% and Lucknow Tejas is nearly 73%, 73.9% or 74%. And overall revenue from both the Tejas up to September ’22 is INR 74 crores.
18. On the catering segment, the revised pricing advantage may see only in Q4.
19. The management stated for Rail neer, capacity utilization for Q2 was 75%, in summer it was 90%. Coming winter is generally not a good months for Rail neer as requirement goes less.
20. INR 250 crores CAPEX, for acquiring new office.
21. If IRCTC has to make any changes to the pricing or to the content of Rail neer or Catering segment, it has to take approval of the Ministry of Railways.
22. On the bookings from third party website, IRCTC charge extra 12 rs per ticket. Around 20% bookings come from third party websites.
23. 33% of total bookings is UPI bookings.

Analyst’s View

IRCTC is a unique PSU with massive cash flows and a strong balance sheet. The company has delivered a strong quarter with a revenue rise by 97% YoY and its business model has once again proven its resilient nature to scale up. The Q2 was lean quarter in nature, all the festival season and travel peak comes in October to December, hence we may see healthy Q3 numbers. Nonetheless, given that IRCTC has a near-monopoly in its space and the resilient demand for its services and products in railway stations, IRCTC remains a good stock to watch out for investors betting on the railway’s theme.

Q1FY23 Updates

Financial Results & Highlights

Detailed Results:

1. The company delivered a strong quarter with revenue rise by 250% YoY reaches to Rs 853 Cr and improving its QoQ growth by 23%
2. The Internet Ticketing segment saw a revenue of Rs 301 Cr reporting 2X growth YoY and 3% QoQ, while EBIT margin declined QoQ.
3. PAT and PBT were up by 198% and 196% respectively YoY.
4. The Catering segment saw a revenue of Rs 352 Cr reporting growth of 32.3% QoQ and 5x growth over YoY
5. The share of the Catering segment to overall revenue increased to 41.3% from 23.3% in Q1 FY22, an increase of 38.5% YoY.
6. The Rain Neer segment saw a revenue of Rs 83.6 Cr reporting growth of 61.2% QoQ and an EBIT margin of 11% versus a loss in Q4.
7. The tourism segment saw a revenue of Rs 115 Cr reporting growth of 43.8% QoQ and a positive EBIT margin of Rs 7.2 million after 9 quarters of incurring losses.
8. The cash and bank balances & the net worth of the company at the end of the quarter Q1 FY 23 is Rs.2175 Crores and Rs.2132 Crores respectively

Investor Conference Call Highlights

1. The number of ticketing booking in this quarter has been around 11.58 Cr i.e. an average of about 12.73 lakh per day.
2. As Indian Railway began to withdraw from the reserved segment, 2S class bookings fell from 38% to 26.9% in this quarter.
3. Management states that the catering expenses will remain at 75% percentage of revenue compare to 62-65% per covid level.
4. The convenience fee and non-convenience fee for this quarter is about Rs 207 Cr and Rs 101 Cr respectively.
5. According to the management, margins on entire catering business ranges from 14% to 18%.
6. On E-catering Segment Company saw a rise in orders of 35,000 per day compare to 21,000 per day to its previous quarter.
7. The monthly average revenue for E-catering increased to Rs 2.63 Cr vs 1.67 Cr in this quarter.
8. In air segment, IRCTC has booked 5500 tickets per day accounting a revenue of Rs 3 Cr.
9. IRCTC in air segment have increased its convenience fees from Rs 50 to Rs 100.
10. Tejas Train has generated a revenue of Rs 41 Cr and delivery a profit of about Rs 5 Cr.
11. In Rail Neer segment capacity utilization has been more than 70% in this quarter.
12. According to the management, company is going to open two rail neer plant with capacity of 2lakh litre by end of this year. Furthermore 3 more plants will be commissioned adding plant capacity to 19 lakh litre by FY 24
13. Total revenue from iPay was around Rs 27 Cr out of which IRCTC share Rs 10 Cr.
14. Bus ticketing revenue was Rs 4.95 Cr out of which IRCTC commission and convenience fees was  Rs 32 lakh.
15. According to the management, IRCTC is in talk of MoU with seven states for State teertha.
16. The management states that the company has been awarded 23 contracts for retiring room and result of this is excepted in the upcoming quarter.

Analyst’s View:

IRCTC is a unique PSU with massive cash flows and a strong balance sheet. The company has delivered a strong quarter with a revenue rise by 250% YoY and its business model has once again proven its resilient nature to scale up. As internet ticketing reaches its peak penetration of 81%, the company has been planning to expand its business in the travel & tourism business and add new capacity in the Rail neer segment. Nonetheless, given that IRCTC has a near-monopoly in its space and the resilient demand for its services and products in railway stations, IRCTC remains a good stock to watch out for investors betting on the railway’s theme.

Q4FY22 Updates

Financial Results & Highlights

Detailed Results:

1. The company saw a 100% YoY rise in total revenues.
2. PAT and PBT were up 106% and 103% YoY.
3. EBIDTA margins for Q4 stood at 40% versus 42.8% YoY due to higher contribution from the catering business.
4. Catering saw revenues of Rs 266.2 Cr reporting growth of 1.5X QoQ & 3X YoY while EBITDA margin came at 9.4% versus 5.5% QoQ.
5. Rail Neer saw revenues of Rs.51.9 Crores reporting a 4% growth QoQ & an EBITDA loss came of Rs.24.3 Crores.
6. Ticketing saw revenues of Rs.292.8 Crores growing by 42.4% YoY & EBIT margin came at 91.5% Vs 83.3% YoY.
7. Tourism saw revenues of Rs 80 Cr & achieved breakeven level.
8. The company announced a final dividend of Rs. 1.5 per share.
9. The bank balances and net worth of the company as on 31st March 2022 were Rs.1732 Crores and Rs.1884 Crores, respectively.

Investor Conference Call Highlights

1. The management states that revenue for Q4 is just 3.5% lower than the pre-COVID level.
2. Catering biz saw high growth due to increased presence in TSV trains section.
3. The management states that in Q4 the average daily ticket sales have been 12.87 lakh.
4. The company incurred one time charge in its Rail Neer segment to share profits of that biz with the ministry of railways from FY 07-21. Further from now on, company will share 15% of the profits of this segment with the ministry.
5. EBIT margins in the ticketing segment have gone up due to increased convenience fees, higher agent collaborations, increased marketing & advertisement income & payment gateway charges.
6. The management states that the cancellation is nearly 19% while the refund is nearly 18%.
7. The management states that the company has been given additional work of a retiring room up-gradation which will help in boosting revenues.
8. The company’s Average realization per ticket is 16.6.
9. The current capacity utilization of Tejas is 70% while the breakeven is achieved at 75%.
10. the percentage of unreserved tickets to total tickets for Indian Railways is 7%.
11. The management states that in the bus ticketing, it has tied up with the red bus and the Abhi Bus along with various states to resume development for the state SCDCs & the revenue from the bus booking is Rs.6 lakhs per day.

Analyst’s View:

Indian Railway Catering and Tourism Corporation (IRCTC) is a Mini Ratna PSU with massive cash flows and a well-managed balance sheet. The company has seen a great Q4 with its revenue reaching the pre-covid levels. The ticketing inventory has also increased to 12.8 lacs per day due to the mandatory reservation in the General category. IRCTC continues to have 80%+ of total bookings for Indian Railways in Q4. The company has applied for a payment aggregator license from both the Ministry of Railways and RBI. It has also increased the B2C catering aggregators to 20 and has seen the number of meals booked per day exceed pre-COVID levels. The tourism segment has suffered mainly due to high operational losses in the Tejas Express. The company is looking to take measures like reducing the frequency of these trains or getting concessions on haulage to reduce these operational losses. It remains to be seen what disruptions come up in the future from the upcoming waves of COVID-19 are, how long will it take for normal rail travel and how will the company’s foray into private trains pans out given the difficulties it is seeing with Tejas. Nonetheless, given that IRCTC has a near-monopoly in its space and the resilient demand for its services and products in railway stations, IRCTC remains a good stock to watch out for investors betting on the travel and railway theme.

Q3FY22 Updates

Financial Results & Highlights

Detailed Results:

1. The company saw a 1.2x YoY rise in total revenues.
2. PAT and PBT were up 170% and 166% YoY.
3. Catering saw revenues of Rs 104 Cr vs Rs 48 Cr last year & EBIT profit of Rs 5 Cr vs EBIT loss of Rs 7 Cr last year.
4. Rail Neer saw revenues of Rs 49 Cr vs Rs 16 Cr last year & EBIT of Rs 5 Cr vs EBIT loss of Rs 2 Cr last year.
5. Ticketing saw revenues of Rs 312 Cr vs Rs 143 Cr last year & EBIT of Rs 265 Cr vs EBIT of Rs 109 Cr last year.
6. Tourism saw revenues of Rs 68 Cr vs Rs 15 Cr last year & EBIT loss of Rs 7 Crs vs EBIT loss of Rs 11 Cr last year.
7. The company announced a dividend of Rs. 2 per share in Q4.

Investor Conference Call Highlights

1. While revenues of the company are still below their all-time high, the absolute EBITDA has hit new highs.
2. Internet ticketing, which has the highest margins amongst all the business segments continued to drive the growth in Q3.
3. Ticketing revenue was on an all-time high of 312 Cr. EBIT margin in this segment was at 84.8% vs 76.3% YoY.
4. The catering segment has moved back to profit at EBIT after 6 quarters of losses.
5. Railneer EBIT margin got back to the double-digit mark at 10.1% vs 6.8% QoQ.
6. The cash and bank balance of IRCTC was at Rs 1821 Cr.
7. 9M revenue from internet ticketing was 728 Cr out of which 68% was the convenience fee and 32% was the non-convenience fee.
8. In the catering segment, cooked food in pantry cars is being served on 428 trains and is available in all Rajdhani, Shatabdi, and Duronto trains.
9. The total marketing revenue from the company’s payment gateway has been 56 Cr.
10. Current production of Railneer is 5.5 lakh liters per day at 45% plant utilization due to winter season and covid impacted demand.
11. In segmentation of tickets booked, 2S is the highest at 38.6%, sleeper class at 38.1%, and second AC, third AC, AC chair car at 22%.
12. The company’s online share of railway ticketing is being maintained at more than 80% levels.
13. The company is facing challenges in iMudra because of changing its partner bank.
14. The company has got some progress in adding its food aggregator and plans to have an aggregator license.
15. The management sees the EBIT margins in the catering segment increasing back to double digits due to more trains being tendered.
16. IRCTC Air is still at below 19-20 levels due to the massive cancellation happening during the Omicron wave.
17. The company currently has 8 IRCTC Executive lounges and plans to open more coming ahead.
18. The number of TSV contracts this quarter has come to 700 vs 280 in the previous quarter.
19. IRCTC may make its engine or continue with the PRS booking engine if the rates are negotiated well.
20. The company is planning to do capex to improve the ticketing infrastructure and do some infrastructure projects.

Analyst’s View:

Indian Railway Catering and Tourism Corporation (IRCTC) is a Mini Ratna PSU with massive cash flows and a well-managed balance sheet. The company has seen a great Q3 with its highest ever ticketing revenues and over 70% rise in both convenience & non-convenience revenues. The ticketing inventory has also increased to 12.5 lacs per day due to the mandatory reservation in the General category. IRCTC continues to have 80%+ of total bookings for Indian Railways in Q3. The company has applied for a payment aggregator license from both the Ministry of Railways and RBI. It has also increased the B2C catering aggregators to 20 and has seen the number of meals booked per day exceed pre-COVID levels. The tourism segment has suffered mainly due to high operational losses in the Tejas Express. The company is looking to take measures like reducing the frequency of these trains or getting concessions on haulage to reduce these operational losses. It remains to be seen what disruptions come up in the future from the upcoming waves of COVID-19 are, how long will it take for normal rail travel and how will the company’s foray into private trains pans out given the difficulties it is seeing with Tejas. Nonetheless, given that IRCTC has a near-monopoly in its space and from the resilient demand for its services and products in railway stations, IRCTC remains a good stock to watch out for investors betting on the travel and railway theme.

Q2FY22 Updates

Financial Results & Highlights

Detailed Results:

1. The company saw a 2.8x YoY rise in total revenues.
2. PAT and PBT were up 355% and 382% YoY.
3. Catering saw revenues of Rs 71 Cr vs Rs 17 Cr last year & EBIT loss of Rs 15 Lacs vs EBIT loss of Rs 20 Cr last year.
4. Rail Neer saw revenues of Rs 41 Cr vs Rs 9 Cr last year & EBIT of Rs 3 Cr vs EBIT loss of Rs 2 Cr last year.
5. Ticketing saw revenues of Rs 265 Cr vs Rs 58 Cr last year & EBIT of Rs 220 Cr vs EBIT of Rs 117 Cr last year.
6. Tourism saw revenues of Rs 27 Cr vs Rs 4 Cr last year & EBIT loss of Rs 21 Crs vs EBIT loss of Rs 9 Cr last year.
7. The company did a stock split of 1:5 in Q2.

Investor Conference Call Highlights

1. Both EBITDA and EPS were higher than Q4FY20 level for IRCTC.
2. EBITDA margin continued to make a new high and crossed the 50% mark and was at 52.2% versus 45.8% last quarter.
3. Ticketing revenue was at an all time high of Rs 265 Cr. EBITDA margin in this segment was at 83.1% vs 77.9% in Q1.
4. The cash & bank balance of IRCTC was at Rs 1945 Cr.
5. IRCTC has full control over how much to charge as convenience fee.
6. The management commented it has got around 4 lakh additional ticketing inventory because of mandatory reservation in general compartment. The total inventory is at 12.5 lac tickets per day currently.
7. The company now accounts for 81% of bookings for Indian Railways.
8. IRCTC provides concessions towards booking of tickets through UPI and it is unlikely to stop doing so according to the management.
9. The management commented that any kind of revenue sharing arrangement dictated by the Indian Railways is expected to be done keeping in mind the expenses of IRCTC for site upgradation and maintenance plus, its infrastructure requirements.
10. The tourism arm of the IRCTC is profitable barring the losses of Tejas Express because of which the entire tourism segment is in loss.
11. Regarding losses for Tejas Express the management said it will look to make the tourism segment of the company turn profitable to reduce its dependency on the convenience fee revenue. This can be done by decreasing the frequency or curtailing the expenses of the Tejas trains.
12. The management also commented that the losses in Tejas has partially been due to the increase in haulage price and it is discussing with the Ministry for decreasing the haulage for the time the train was not running to cut short its losses
13. The company said that the ministry doesn’t have any involvement in the agreement that IRCTC enters into with OTA agents. The management also said that it charges an additional Rs 12 per transaction from the online aggregators.
14. The management states that it aims to keep convenience fee as low as possible to make rail travel as accessible as possible. It will continue to keep convenience fee at current levels as long as it can make enough profits to run things smoothly.
15. The company earned Rs 104 Cr of convenience fee in Q1 and Rs 185 Cr in Q2. The non-convenience revenue has increased from Rs 46 Cr in Q1 to Rs 80 Cr in Q2.
16. The company received around Rs 20 Cr from advertising revenue.
17. The management expects this level of non-convenience fee revenue to persist going forward in FY23.
18. The eCatering segment has seen total value of orders of Rs 27.8 Cr with average booking of 24,210 meals per day in the period of April to Oct 2021.
19. The B2C agents of the company in eCatering has increased from 2 to 20 while the number of stations where eCatering service is live has increased to 252.
20. The company is in the process of getting approval from ministry for making changes in its MoU for starting its own payment gateway application.
21. The company is looking to obtain licence from RBI to have its payment aggregator service to increase its non-service revenues.
22. The company received around Rs 58.34 Cr from annual maintenance charge and Rs 12.39 Cr from OTA agents. It also received Rs 2.36 Cr from licence fees.
23. The company also monetized a few website inquiries which also yielded Rs 1.1 Cr revenues.
24. The total inventory booking average in Q2 was at 80.23%. As of Oct, 3019 trains are running.
25. The number of trains offering catering services has increased from 550 last quarter to 634 this quarter. Around 346 are offering on train catering while 288 have train side vending.

Analyst’s View:

Indian Railway Catering and Tourism Corporation (IRCTC) is a Mini Ratna PSU with massive cash flows and a well-managed balance sheet. The company has seen a great Q2 with its highest eve ticketing revenues and over 70% rise in both convenience & non-convenience revenues. The ticketing inventory has also increased to 12.5 lacs per day due to the mandatory reservation in General category. IRCTC continues to have 81% of total bookings for Indian Railways in Q2. The company has applied for a payment aggregator license from both the Ministry of Railways and RBI. It has also increased the B2C catering aggregators to 20 and has seen the number of meals booked per day exceed pre-COVID levels. The tourism segment has suffered mainly due to high operational losses in the Tejas Express. The company is looking to take measures like reduce the frequency of these trains or get concessions on haulage to reduce these operational losses. It remains to be seen what disruptions come up in the future from the upcoming waves of COVID-19 are, how long will it take for normal rail travel and how will the company’s foray into private trains pans out given the difficulties it is seeing with Tejas. Nonetheless, given that IRCTC has a near-monopoly in its space and from the resilient demand for its services and products in railway stations, IRCTC remains a good stock to watch out for investors betting on the railway’s theme.

Q1FY22 Updates

Financial Results & Highlights

Detailed Results:

1. The company saw a 65% YoY rise in total revenues.
2. PAT and PBT were down 20.21% and 20.02% QoQ.
3. Rail Neer saw QoQ rise in segment revenues and return to profitability in segment EBIT to Rs 1.81 Cr in Q1FY22 vs an EBIT loss of Rs 0.58 Cr in Q4FY21.
4. The internet ticketing revenue was down to Rs 150 Cr from Rs 212 Cr in Q4FY21 due to ticketing volume impacted by the second wave come to 77.9%.
5. The board approved a stock split of 5:1, subject to the approval of the Railway Ministry.
6. IRCTC has restarted 2 Tejas trains in the Lucknow-Delhi-Lucknow and Ahmedabad – Mumbai – Ahmedabad routes from 7^th Aug 2021.

Investor Conference Call Highlights

1. EBITDA margin for IRCTC reached a new high of 45.8% in Q1 vs 42.8% in Q4FY21.
2. QoQ improvement in margins was led by a decline in losses in the Catering segment and turnaround of the packaged drinking water segment.
3. The cash & bank balance of IRCTC was at Rs 1614 Cr.
4. The number of pantry cars running has increased from 272 in March 2021 to 316 currently.
5. In total, the company’s catering services are now doing business in 572 trains vs 430 trains in March.
6. Around Rs 44 Cr from the Rs 57 Cr of catering revenues comes from licensing fees.
7. Within internet ticket booking, the company has a sharing ratio with Indian Railways of 60:40. But in the new wallet offering, doesn’t have any sharing agreement.
8. The company already has 6 Lac customers in the open e-wallet product.
9. Convenience fees account for 69% of internet ticketing revenues. The remaining 31% comes from service charges from B2B partners, earnings from ads, partner enrolment fees, co-branded credit card earnings, and many other sources.
10. The company earned Rs 1.1 Cr from promotional mailer ads, Rs 44 Lacs from SMS ads, and a total of Rs 8.5 Cr from ads alone.
11. The number of tickets booked in Q1 was 6.37 Cr. IRCTC accounted for 81% of all tickets sold by Indian Railways in Q1.
12. Rail Neer saw utilization of 32-35% in Q1. It also added a new capacity of 4.2 lac bottles per day from the new plant in Una in July.
13. Rail travel is slowly catching up as ticket bookings have risen to 3.44 Cr in July.
14. The management states that the non-convenience fees income in internet ticketing revenues will rise as the overall travel and tourism industry comes back to normalcy and demand for such ads rises.
15. The company is in talks with a food delivery aggregator to enhance the catering business.
16. IRCTC will also be working towards building its brand as an e-catering aggregator according to the management.
17. On-time delivery remains the highest priority when contrasting food delivery to trains vs food delivery in general. The management has stated that it will not go ahead with any tie-ups with food delivery aggregators unless IRCTC becomes certain of ensuring that on-time delivery and logistics are fully figured out.
18. The company was looking for a private rail tender since last year and floated EOI thrice and from regional clusters but was unable to find partners. It has signed a non-binding MoU with NIFL.
19. The average number of trains running in Aug is at 2750 and is rising steadily. Around 30% of this number would be premium trains. Indian Railways is running around 700+ trains short of pre-covid levels.
20. The breakup of the ticket bookings is 39% for 2S, 39% for sleeper, 14% for 3AC, 3.3% for 2AC, and 2% for AC Chair.
21. The UPI share in all ticket bookings is at 26%.
22. The company has already integrated its payment gateway to the website and is looking to complete the integration with the app soon. It is also looking into getting approval from RBI to set up a payment aggregator business.
23. E-catering is already doing 17,000 meals a day which is not far from the pre-covid level of 21,000 meals a day. The company also gets bookings for around 2500 meals a day from its B2C ticket partners like MakeMyTrip and others.
24. Domestic tourism is slowly coming back. The company is seeing very good demand for the Bharat Darshan packages and the newly launched Char Dham Yatra is already fully booked.
25. The future capex for IRCTC will depend on whether the company manages to win the upcoming tenders for private trains.

Analyst’s View:

Indian Railway Catering and Tourism Corporation (IRCTC) is a Mini Ratna PSU with massive cash flows and a well-managed balance sheet. The company has seen a resilient Q1 with Rail Neer bouncing back and the number of open trains rising steadily. It has seen a good rise in ticket bookings, especially in July when it saw 3.44 Cr monthly bookings. IRCTC is also seeing its share in total booking for Indian Railways rise to an unprecedented 81% in Q1. The company has already signed a non-binding MoU with NIFL for partnering up to bid for new private train tenders. It is looking to tie up with food delivery aggregators on the condition that the logistics and on-time delivery be fully focused on. The company is also seeing good demand in the mass tourism segment especially in the religious circuits and Bharat Darshan. It remains to be seen what disruptions come up in the future from the upcoming waves of COVID-19 are and how long will it take for normal rail travel and how will the company’s foray into private trains pans out. Nonetheless, given that IRCTC has a near-monopoly in its space and from the resilient demand for its services and products in railway stations, IRCTC remains a good stock to watch out for investors betting on the railway’s theme.

Q4FY21 Updates

Financial Results & Highlights

Detailed Results:

1. The company saw a 46% QoQ rise in total revenues and a 33% QoQ rise in PBT & PAT.
2. Compared with Q4 last year, the revenues were down 40% YoY while PBT & PAT were down 28% & 23% YoY respectively.
3. Considering the major expenses, the biggest change was in “Expenses for Tourism” which rose to Rs 50 Cr in Q4 from Rs 13 Cr in Q3 indicating a QoQ rise in tourism activities for IRCTC.
4. The QoQ improvement was good across all segments with the biggest improvement in tourism which more than doubled as travel restrictions were coming down as compared to Q3.
5. Considering the segment operating profits, only the internet ticketing segment has seen a rise of 59% QoQ & 14% YoY while all other segments are operating at losses.
6. The Q4FY21 operating losses are highest in the Tourism segment at Rs 42 Cr which is even above the revenues earned from the segment which were Rs 31.58 Cr indicating that this is the overall worst-performing segment for IRCTC at present.
7. Lastly, the company has also announced a final dividend of Rs 5 per share for FY21.

Investor Conference Call Highlights

1. IRCTC is looking for candidates to pursue a strategic partnership with an external partner to provide additional capital to fuel the company’s expansion plans for the privatization of certain train routes around specific urban clusters.
2. The bus ticketing business has also started picking up and the company is now planning marketing activities with its partners.
3. IRCTC is currently contracted for catering for 450 trains and 100 such contracts are in the pipeline.
4. The booking % for the sleeper class was at 40% while the 2nd class booking % was at 36% for FY21. The rise in ticketing revenue was mainly due to the rise in internet booking for these classes.
5. The Rail Neer plants in Bhusawal, Himachal Pradesh, and Vijayawada will be completed in FY22 while the Kota & Bhubaneswar plants will come up in FY23.
6. Around 1500 trains are running currently which have reservation facilities.

Analyst’s View:

IRCTC is a unique PSU with massive cash flows and a well-managed balance sheet. The company has seen a tough FY21 as travel has remained largely subdued with the catering segment suffering the most in the year. But it has shown good QoQ recovery especially in ticketing revenues which should indicate that business is slowly is coming back to normalcy. The company also has a lot of plans for expansion in the private trains space and is actively looking for a partner to finance this expansion. It is also looking to gain an additional revenue source in internet ticketing by inserting itself in the booking of the non-reserved classes and increasing the % of total booking for Indian Railways while slowly replacing offline ticketing as much as possible. It remains to be seen how the company’s plans in the privatization of trains go and how long will it take for normal consumer behaviour to resume. Nonetheless, given that IRCTC has a near-monopoly in its space and from the resilient demand for its services and products in railway stations, IRCTC remains a good stock to watch out for investors betting on the railways theme.