IRCTC Ltd: History & Future Outlook

Table of Contents

IRCTC Ltd is a central public sector company under the Ministry of Railways, Government of India, ‘Mini Ratna (Category-I).’ As an extended arm of the Indian Railways, IRCTC Ltd was formed on 27 September 1999 to upgrade, professionalise and manage catering and hospitality facilities at stations, trains and other locations, and to promote domestic and foreign tourism through the creation of budget hotels, special tour packages, information packages & commercial publicity and global reservation systems. The authorized capital of the company is 250 crores and paid-up capital is 160 crores, fully subscribed by Ministry of Railways, Government of India. It’s registered and Corporate Office is situated at New Delhi.

As a Central Public Sector Enterprise with its 87.4% stake owned by the Govt. of India and under the administrative control of the Ministry of Railways, the company is the only entity authorized by Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India. As of today’s date, this is IRCTC share price.

It was incorporated with the objective to upgrade, modernize and professionalize catering and hospitality services managing hospitality services at railway stations, on trains and other locations and to promote international and domestic tourism in India through public-private partnership. It has also diversified into other businesses, including non-railway catering and services such as e-catering, executive lounges and budget hotels, which are in line with its objective to build a ‘one stop solution’ for its customers.

The core activities of the Company are detailed below:

Catering & Hospitality
Internet Ticketing
Travel & Tourism
Packaged Drinking Water (Rail Neer)

At present, the Company operates through:

Fourteen Rail Neer Plants at Nangloi-Delhi, Danapur-Bihar, Palur-Tamil Nadu, Ambernath-Maharashtra, Amethi (Uttar Pradesh), Parassala-, Tamil Nadu, Bilaspur (Chhatisgarh) Hapur (Uttar Pradedh), Sanand- Gujaratd, Mandideep-Madhya Pradesh, Jagiroad-Assam, Maneri-(Madhya Pradesh), Nagpur, (Maharashtra) and Sankrail-Kolkatta
11 Base Kitchens at located at New Delhi, Howrah, Ahmedabad, Patna, Mumbai Central, Mumbai CST, Ballarshah, Nagpur, Balasore, Sealdah and Kharagpur Jn 5 Zonal Offices, namely, New Delhi, Mumbai, Kolkata, Chennai, Secundrabad;
Five Zonal Offices at New Delhi, Mumbai, Kolkata, Chennai & Secundrabad
Ten Regional Offices at Lucknow, Chandigarh, Jaipur, Bhopal, Ahmadabad, Guwahati, Bhubaneswar, Patna, Ernakulam and Bangalore;
One Internet Ticketing Office at New Delhi
One Tourism office at New Delhi.

A graphic showing the share of revenue for indian railway catering and tourism corporation (irctc) in fy20. The graphic is divided into six sections, each representing a different business division of irctc. The sections are: internet ticketing (27%), catering (46%), packaged drinking water (9%), tourism & travel (8%), rail neer (8%), and other businesses (2%). The graphic also includes a brief description of each division.

A timeline of key milestones in irctc’s journey so far, from 2002 to 2019.

This table shows how the change in business mix has resulted in improvement in profitability for different segments of irctc from fy18 to fy20.

Pie Chart Showing Percentage of Revenue Generated by IRCTC:

This is a pie chart showing the percentage of sales for different categories in the indian railways. The chart shows that rail neer is the largest source of sales, followed by catering, e-ticketing, and tourism. Rail neer accounts for 47% of sales, catering for 32%, e-ticketing for 14%, and tourism for 7%. The chart has four sections, each with a different color and label. The largest section is orange and labeled “rail neer”. The second largest section is gray and labeled “catering”. The third largest section is blue and labeled “e-ticketing”. The smallest section is yellow and labeled “tourism”.

Business Insights:

The revenues declined during Q2FY21 at Rs. 89cr as compared to Rs. 513 cr. in Q2FY20.The company reported decline as railway operations remained suspended due to COVID-19.
The EBITDA declined to Rs.(6 cr.) in Q2FY21 as compared to Rs. 142 cr. in Q2FY20. Except for Internet Ticketing which reported EBIT of Rs. 613mn (has low fixed overheads), the other 3 segments viz; Catering, Rail Neer and Tourism & State Teertha reported EBIT loss of Rs. 205 mn/Rs. 23 mn/Rs. 87 mn respectively due to limited absorption of fixed costs in lockdown.
The PAT declined to Rs. 33 cr. in Q2FY21 as compared to Rs. 100 cr. in Q2FY20. However, after adjusting for exceptional gain of Rs. 424mn (excess provisions of Rs. 258 mn relating to performance related pay and Rs. 164 mn relating to claim made on railways) loss stood at Rs. 97mn
The cash on books is Rs. 15.3 bn.

A set of four charts showing the quarterly net sales, ebitda, pat, and pat margins for a company.

Future Outlook:

The company is a perfect play on the unlocking theme with gradual relaxations in travel restrictions.
With the relaxations getting eased and things getting back, the company will bounce back the fastest.
Also the capacity expansion of Rail Neer and the impact of price hike announced in catering will play out in the future going ahead.

Segment Wise Outlook:

This table shows the services and performance of the indian railway catering and tourism corporation (irctc) in six sections: internet ticketing, catering and hospitality, packaged drinking water, travel and tourism, private trains, and tejas trains.

StockEdge Technical Views :

IRCTC Ltd. has been taking strong support from the 1300-1360 zone and till the stock stays above the above level, we may see possible bounce in the near term. Probable resistance in the medium term comes at 1590-1600 zone. Technical parameters look neutral as of now.

A candletick chart of the stock price for indian railway catering and tourism corp, india, showing a horizontal support line and a vertical resistance line.

Bottomline

IRCTC Ltd. is a monopoly play in the train services, e-ticketing space. IRCTC Ltd. has been impacted in H1FY21 due to the lockdowns because of coronavirus. However, the company has been catering for the essential services. But with the lockdown getting eased and restrictions getting lifted the company will bounce back faster. Also with the capacity expansions in the different segments, the future would be better for the company. The impact on the topline and bottomline has been clearly visible due to the services getting impacted. But with things getting normalised we expect the stock to perform in a healthy manner going ahead.

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Disclaimer:

This document and the process of identifying the potential of a company has been produced for only learning purposes. Since equity involves individual judgements, this analysis should be used for only learning enhancements and cannot be considered to be a recommendation on any stock or sector. Our knowledge team has limited understanding and we all are learning the art and science behind this.