IRCTC posts 30% rise in Q4 net profit, declares final dividend

India Railway Catering and Tourism Corporation (IRCTC), the listed arm of the Indian Railways, announced its results for the fourth quarter ended March 2023 on 29th March 2023. For the quarter, it announced 30.4% higher net profits at ₹279 crore as operating profits from its non-ticketing business went up sharply on a yoy basis. Let us begin with the top line story. For the Q4FY23 quarter, IRCTC reported 39.7% higher revenues at ₹965 crore. In terms of segmental growth, the revenues from catering were up 50% yoy while the revenues from the Rail Neer (mineral water) business grew 40% yoy. Incidentally, the largest revenue pocket of internet ticketing was stagnant over last year.

A quick look at the numbers of IRCTC

The table below captures the gist of the IRCTC story in numbers comparable to the year ago quarter and also with the sequential quarter.

Clearly, the profits have grown almost in tandem with the revenue growth and most of the operational advantages appear to have been passed on to the bottom line. However, there is tapering of margins at an operating level and also at a PAT level largely due to a higher revenue base in the current quarter. Let us begin with the segmental break-up of revenues and operating profits of India Railway Catering and Tourism Corporation (IRCTC).

Segmental picture of revenues and operating profits

There was a common thread running in the segmental performance of the top line and the bottom line of India Railway Catering and Tourism Corporation (IRCTC) for the March 2023 quarter. Here are some key talking points that capture the gist of the story. Here we look at the 5 major segments of IRCTC for a more granular picture.

• Let us talk of the catering vertical first. For the fourth quarter ended March 2023, the catering vertical saw revenues grow by 48.9% at ₹396 crore. In terms of operating profit contribution of the catering vertical, it grew 92% yoy at ₹48 crore.
   
• Let us now turn to the Rail Neer vertical. For the fourth quarter ended March 2023, the Rail Neer vertical saw revenues grow by 34.4% at ₹73.36 crore. In terms of operating profit contribution of the Rail Neer vertical, it turned around from a loss of ₹24 crore to an operating profit of ₹13 crore.
   
• Let us shift tack to the Internet ticketing vertical. For the fourth quarter ended March 2023, the internet ticketing vertical saw revenues grow by 0.7% at ₹295 crore. In terms of operating profit contribution of the internet ticketing vertical, it was down 3% yoy at ₹260 crore. However, this is the vertical with the highest operating margins.
   
• Let us now talk about the tourism vertical. For the fourth quarter ended March 2023, the tourism vertical saw revenues grow by 157% at ₹139 crore. In terms of operating profit contribution of the tourism vertical, it turned around to profits of ₹13.5 crore from an operating loss in the year ago quarter.
   
• Finally, we turn to the State Teertha vertical. For the fourth quarter ended March 2023, the State Teertha vertical saw revenues grow by 153% at ₹65.45 crore. In terms of operating profit contribution of the State Teertha vertical, it grew 5-fold yoy at ₹13.96 crore.

To sum it up, the internet ticketing business remains the biggest margin generating business. However, growth is coming from other four segments; both in terms of revenues and in terms of operating profit growth.

How the story translated into the bottom line for IRCTC?

Let us quickly look at how all this segmental performance of India Railway Catering and Tourism Corporation (IRCTC) translated into a macro picture. While the operating profits for the quarter were up 29.8% at ₹349 crore, PAT grew 30.4% on to ₹279 crore. The growth in the operating profits and in terms of PAT has been fairly stable. What was the trigger? The operating profits got a boost from sharply higher operating profit contribution from catering, Rail Neer, State Teertha and Tourism. The operating profits from the internet ticketing business were marginally lower on a yoy basis but still remains the business with the highest level of operating margins. The company had exceptional gains of ₹27 crore from writeback of earlier made provisions, which added to the profits in the quarter.

Let us finally look at the margin picture. The operating profit margins of India Railway Catering and Tourism Corporation (IRCTC) tapered yoy from 38.86% to 36.12%. However, this fall in OPM was largely on account of sharply higher top line revenues based. Also, the weak growth in the operating profits of the core internet ticketing business ended up being an overhang on performance. Like in the case of the operating margins, even the PAT margins tapered to 28.9% compared to 30.9% in year ago period. It was once again a case of a higher base of revenues pulling down the margins. The board of India Railway Catering and Tourism Corporation (IRCTC) has proposed a final dividend of ₹2 per share taking the total dividend payout to ₹5.50 per share for FY23; including the ₹3.50 interim dividend paid during the year.