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After going through Financials of IRCTC, I can see that, there was Dip in revenues and PAT both in FY2018. Operating Profit dropped from 314 to 274, and Net Profit dropped from 229 to 221 (negligible). Dividend payout was also less in that year.
My understanding was that, Railway passengers in India generally goes up every year, and in 2018, there was no Pandemic, so what was the reason for this drop? Was it due to Fuel price rise or high inflation or any other specific reason?
(Note: There were massive lay offs in IT industry in FY 2018, which reduced IT workforce by large amount, which I can remember being part of IT industry at that time).
This looks Cyclic business to me, though it is PSU Monopoly, sustainability of PAT growth may not be there.
Valuations seems to be still on higher side though stock price has corrected a lot after October 2021. Initial enthusiasm about the stock is over but still consistency in PAT looks concern to me. I give more importance to consistent Sales and PAT growth for identifying secular growth stories.
Government policies can also have impact on margins in future.
Stock is on my watch list for some time.
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govt had reduced the service fees.
railway passenger in india is growing at 2% yoy.
IRCTC enjoyed movment of 2S class booking to online as a mandatory to make their online booking share reach 83%.
ticketing business volume wont grow more than 2-3%.
ticketing revenue can only go up if services fees is increased.
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âIRCTC Eyes Major Expansion in Non-Railway Catering Business Pan India
IRCTC is expanding its business beyond just managing catering services for trains. Currently, it is providing catering services to different government departments, ministries, autonomous bodies, and universities. They have even set up outlets in places like the Department of Telecommunications in New Delhi and the Calcutta High Court.
IRCTC is planning to grow its catering business even further. They have signed agreements with various government and autonomous bodies, including defense establishments like the Border Security Force and educational institutions like the Indian Maritime University and Cotton University. The company is also in the process of establishing 15 more catering units across the country soon.
The ultimate goal of IRCTC is to become a top brand in hospitality and catering throughout the country. They are in talks with other government organizations and businesses to set up more catering units and provide comprehensive catering solutions. The idea is to bring their expertise and quality service beyond just the railway system and make a mark in the broader hospitality industry.
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Why IRCTC share price rising ? A blog written by Tanushree of equitymasters
An article that covers IRCTC story based on latest developments. This blog contains Adâs intermittently on different stock stories
While this blog must have been prepared 3-4 days back , but what I find FIIâs have bought on cash delivery basis this stock yesterday which made it to rise 14% in a single day.
Discl : This is one of my my âbuy and hold stockâ invested from lower level in this stock since Covid lock down days of 2020, I had partially booked profit earlier to recover my capital. However still holding a major portion.
This is not a buy or sell recommendation.
Please do your own assesment before investing. PSU stocks have their own set of advantages and disadvantages
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Read the recent earnings call transcript, will be interesting to see if they can actually execute their non-railway ambitions of becoming catering / hospitality giants.
Sidenote: Was just a little amused with the fact that the MD / CFO were not that great with numbers and didnât have a basic PPT with them during the investor call for reference. These are the small things that give you an insight into how sharp / quick the management is. But, thatâs just my reading of it.
Would like to see how much revenue / EBITDA can be generated from various new initiatives like:
- e-Catering partnerships with Zomato / Devyani International
- Online helicopter bookings
- Monetization of Chatbots
- Setting up iPay (itâs own payment platform)
The biggest risk I believe, is that it is a GOVERNMENT created monopoly. Government has tried to privatize this sector before with little success. This could happen again, and is IRCTC in a position to compete? Can it compete with the likes of MMT/EasyTrip if online railway bookings open to the private sector? That, is the biggest risk.
At the current valuation, Iâd be a little cautious of getting into the stock. Margin of safety looks low.
Iâve written a DETAILED article here covering all of this in greater detail - IRCTC : a play on Indian Railways - by Siddharth Bothra
Disclosure: Invested a few years back, and contemplating offloading majority of my position.
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Indian Railway Catering and Tourism Corporation Q3 FY24 Earnings Conference February 14, 2024
Catering segment:
The catering segment reported a 29.1% year-on-year growth in revenue, reaching Rs.507.76 crores and a 17.6% increase on a quarter-on-quarter basis.
It may also be noted that the Q3 and nine monthsâ revenue in FYâ24 is the highest ever recorded in the catering segment. The EBITDA margin continued to show substantial improvement reaching 15.44% compared to 10.73% year-on-year. However, there was a slight decrease compared to the 17.21% quarter-on-quarter margin, mainly due to changes in the product mix within the catering vertical as the prepaid trains revenue having low EBITDA, has increased Q3 to Rs.59.76 crores from Q2 Rs.207 crores.
Internet Ticketing:
- This segment continues to demonstrate resilience amid the conversion of the reserve to tickets back to the early reserve tickets during the pre-pandemic period. The revenue for the quarter was Rs.335.31 crores growing by 11.4% year-on-year and 2.39% quarter-on-quarter. The EBITDA margin for the quarter came at 83.02% versus 83.7% quarter-on-quarter and 84.15% year-on-year.
Tourism and state distance:
- That segment saw strong growth in revenue for the quarter at Rs.195.47 crores, implying a growth of 32.28% year-on-year and 21.11% quarter-on-quarter. Given the revenue growth, the segment reported a positive EBITDA margin of 12.10% versus 3.6% on a quarter-on-quarter and 10.79% year-on-year basis.
Rail Neer:
- Q3 FYâ24, reported a value of Rs.83.76 crores marking a sequential growth quarter-on-quarter of 7.39% and a year-on-year increase of 6.05%. The reported EBITDA margin stood at 13.43% representing an improvement compared to both the year-on-year figures of 11.20% and the quarter-on-quarter figure of 12.43%. However, the segmentâs quarterly profit showed a negative return of minus 3.3 crores contrasting with the previous quarterâs profit of 8.8 crores. This decline was primarily attributed to an adjustment of an exceptional item amounting to Rs.14.51 crores in this quarter.
- For Q3 FYâ24, the cash and bank balances and the net worth of the Company at the end of the quarter is Rs.2,258 crores and Rs.2,946 crores respectively
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