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.

 

Q1FY22 Updates

Financial Results & Highlights

Consolidated Financials (In Crs)
  Q1FY22 Q1FY21 YoY % Q4FY21 QoQ %
Sales 258 156 65.38% 358 -27.93%
PBT 111 -29 483% 139 -20.14%
PAT 83 -25 432% 104 -20.19%

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 7th 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

Standalone Financials (In Crs)
Q4FY21 Q4FY20 YoY % Q3FY21 QoQ % FY21 FY20 YoY%
Sales 358.25 595.70 -40% 245.23 46% 868.69 2342.41 -63%
PBT 139.20 193.21 -28% 104.39 33% 260.88 729.58 -64%
PAT 103.79 135.14 -23% 78.09 33% 189.90 513.10 -63%

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.