Shares of the Indian Railway Catering and Tourism Corporation Ltd (IRCTC), a state-owned enterprise providing ticketing, catering, and tourism services, saw a decline in value ahead of the company’s first-quarter financial results for the fiscal year 2025. As market anticipation builds, analysts have weighed in on what to expect from IRCTC’s upcoming earnings report, which is set to provide insight into the company’s financial health and future prospects.
Q1 Financial Expectations: Growth in Profit and Revenue
IRCTC is projected to report a year-on-year (YoY) increase in net profit for the June quarter. Analysts at Prabhudas Lilladher anticipate a 6.7% rise, bringing the net profit to approximately ₹303.30 crore, compared to ₹284.10 crore in the same period last year. This growth highlights the company’s steady performance despite the challenging economic environment.
Revenue is also expected to see a significant boost. Sales are forecasted to rise by 11.2% YoY, reaching ₹1,114.20 crore, up from ₹1,001.80 crore in the corresponding quarter of the previous year. This increase reflects the growing demand for IRCTC’s services, particularly as travel and tourism gradually recover post-pandemic.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin Analysis
The EBITDA for the quarter is projected at ₹393.40 crore, with a margin of 35.30%. This represents a modest improvement of 107 basis points from the previous year. The margin expansion suggests that IRCTC has been able to manage its operational costs effectively while capitalizing on increased revenue.
Segment Performance: Ticketing, Catering, and Tourism
Breaking down the revenue streams, the online ticket booking segment is expected to be a major contributor to IRCTC’s earnings. Prabhudas Lilladher forecasts that the company will book 11.6 crore tickets during the quarter, translating to a revenue of ₹320 crore from this segment alone. The robust performance of the ticketing division underscores IRCTC’s dominance in the Indian railway ticketing market.
The catering segment is also poised for growth, with an expected 7% YoY increase in revenue, bringing the total to ₹510 crore. This growth can be attributed to the ongoing recovery in travel, which has bolstered demand for onboard catering services.
The tourism division, which includes travel packages and hotel bookings, is expected to grow by 11% YoY. The gradual return of domestic and international travel has positively impacted this segment, contributing to the overall revenue increase.
Market Sentiment and Stock Performance
Despite the positive earnings outlook, IRCTC shares were trading lower ahead of the results announcement. On August 12, 2024, the stock closed at ₹923.55, down 0.09% from the previous day’s close of ₹924.35. The stock has seen fluctuations within a 52-week range, with a high of ₹1,148.30 and a low of ₹635.20. The current market cap of IRCTC stands at ₹73,948 crore, reflecting its substantial presence in the market.
Brokerage Ratings and Future Projections
Prabhudas Lilladher has maintained a ‘Reduce’ rating for IRCTC, setting a target price of ₹811. This target is based on a multiple of 47.5 times the estimated earnings per share (EPS) for FY26. The conservative rating suggests that while the company is expected to perform well, there are potential challenges or market conditions that could impact its future growth trajectory.
Key Dates: Earnings Call and Annual General Meeting
Investors and analysts are keenly awaiting IRCTC’s earnings conference call scheduled for Wednesday, August 14, 2024, at 11:30 AM. This call will provide detailed insights into the Q1FY25 results and the company’s strategic direction moving forward.
Additionally, IRCTC will hold its 25th Annual General Meeting (AGM) on Friday, August 30, 2024, at 12:30 PM. During this meeting, shareholders will vote on various resolutions, including the declaration of a final dividend for the financial year 2023-24. The record date for determining shareholders eligible to receive the dividend is set for August 23, 2024. If approved, the dividend will be disbursed within 30 days following the AGM.
Conclusion
As IRCTC prepares to announce its Q1FY25 results, the market remains cautious, with shares trading slightly lower. Despite this, the company’s financial outlook appears positive, with anticipated growth in profit, revenue, and margins. Investors will be closely watching the upcoming earnings report and subsequent conference call for further insights into IRCTC’s performance and future strategy.
This period is crucial for IRCTC as it navigates the challenges and opportunities in the travel and tourism sector. With the AGM on the horizon, shareholders will also have the chance to assess the company’s long-term vision and its ability to deliver consistent returns.
