IRCTC share price declines 5% post Q4 results on tepid net profit growth that misses estimates: Announces Dividend

IRCTC shares experienced a 5% drop in early trading on Wednesday, following the company's announcement of a slight increase in its Q4 net profit that failed to meet market expectations. The stock reached a daily low of ₹1,028 on the BSE, and was trading at ₹1,034.40, down 4.46%, by 10:49 am IST.

Revenue surged by 20% to ₹1,154.8 crore, but both revenue and profit fell short of analyst expectations. IRCTC's EBITDA increased by 3.4% in Q4, reaching ₹402.96 crore. Despite the EBITDA increase, the EBITDA margin declined from 36.8% to 34.89% year-over-year.Internet ticketing's contribution to revenue dropped to 31%, down from 32.8% in the previous year and 37.1% in FY23. 

Prabhudas Lilladher's Research Analyst, Jinesh Joshi, disclosed to Business Today that elevated other expenses hindered IRCTC's performance, leading to a shortfall in both Profit After Tax (PAT) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). The brokerage firm has retained a 'Hold' rating for the stock, setting a price target of ₹825. "The stock is currently trading at 66.1 times our FY25E EPS estimate. We have a 'Hold' rating with a price target of ₹825," stated Joshi.

Prabhudas Lilladher had anticipated the company to report a net profit of ₹306.5 crore, reflecting a 21.2% year-on-year increase, but a 2.5% decline quarter-on-quarter.

Despite attaining varied outcomes, the IRCTC board has declared a conclusive dividend of ₹4 per share for the financial year 2023-24, equivalent to 200% of the paid-up share capital, totaling ₹256 crore.

On Tuesday, May 28, the Indian Railway Catering and Tourism Corporation (IRCTC) unveiled its consolidated financial results for the January-March quarter of fiscal 2023-24 (Q4FY24). The company reported a 2% increase in its net profit, which stood at ₹284 crore compared to ₹279 crore during the same period last year.

The railway public sector undertaking (PSU) saw a significant increase in its operating performance during the period. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed by 11.6% to ₹362.4 crore, up from ₹324.6 crore in the same period last year. While the margin slipped slightly to 31.4%, it remained healthy compared to the 33.6% achieved in the previous year.

IRCTC's revenue saw mixed results in the latest fiscal year. While internet ticketing revenue declined to 31%, down from 32.8% last year and 37.1% in FY23, its catering business experienced strong growth. This segment, the second-largest contributor to IRCTC's revenue, saw a 34.1% increase, reaching ₹530.8 crore. Other notable growth areas include the Rail Neer packaged drinking water unit, which saw a 13.1% revenue increase to ₹83 crore, and the tourism unit, which grew 11.6% to ₹154.6 crore.

The market capitalization of IRCTC, according to the Bombay Stock Exchange, is currently valued at ₹87,152 crore. On May 28, IRCTC shares closed at ₹1,082.70 apiece on the BSE, representing a 1.60% increase.

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

As of Q2FY24, the Indian government holds 62.4% of the company's shares. Foreign portfolio investors own 7.1% of the company's shares. Domestic institutional investors own 10.5% of the company's shares. Regular shareholders collectively own 20% of the company's shares. 

IRCTC is the sole authority authorized by the Indian government for online railway ticket sales, railway catering services, and the supply of packaged drinking water at Indian railway stations and trains. Over the years, the company has extended its offerings to encompass a diverse array of tourism and hospitality services, including opulent train excursions, hotel reservations, and vacation packages.