But irctc is not a private train. Any company where govt have more than 50 perc stake is govt company so private company rules may not be applicable to it. Same preferential treatment given to many psus companies including nmdc coal India defense psu etc.
As I said, dont fall for wrong narratives and imaginations. Read up … There is ample data on Google. Read what Govt and Indian Railways is doing and saying.
Would request all newbies not to get carried away by narratives and price rise.
Also observe delivery % of IRCTC stock in past 1 month.
Everything is a buy at some price and avoid at other price.
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Plans for 4th Private Train Agra Varanasi
Plans for 5th Private Train New Delhi Dehradun
I remember in the con call, the MD had mentioned that they will wait for 2-3 months before refocusing their efforts on this new business line, but it seems the rail ministry continues to push them for more private trains. This has been reported in the hindi print media, not in the English print media as yet. Remains to be seen how they manage these operationally and profitably over a consistent period of time, though the plans for 150 or so private trains seems to be on track
Disclosure: invested with 40% of portfolio value
Looks like plans for another Tejas train ( hopefully a private one ) are being discussed
Wonder what is the real operating profit
One article, which quotes a written reply by railway minister in Parliament, mentions the October operating profit for New Delhi Lucknow Tejas express at 7.73 lakhs
Private trains soon! Under PPP model, 100 new trains on Indian Railways network; details here-https://www.financialexpress.com/infrastructure/railways/private-trains-soon-under-ppp-model-100-new-trains-on-indian-railways-network-details-here/1895750/
Whereas an earlier article mentions the same as 70 lakhs
Or is it that Haulage charges and train rental expenses were not considered while mentioning 70 lakhs. If thay be the case and we are at nearly 7.73 lakhs operating profit, that calls into question the entire valuation of this potential new business line, which in turn impacts IRCTC valuation as well
Thoughts welcome
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when travel i restrict nationwide and people are not willing to travel
wonder what will be the impact on irctc balance sheet
Yes there will be an impact as IRCTC all business segments are almost shut as on today. Fewer trains hence fewer bookings, no catering services from tomorrow only some static units will be open to sell packed items, tourism services are completely shut. Current quarter will be impacted marginally and next quarter depends on how early this pandemic stops.
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Since railways is considered as means of travel for common man and in current situation, common man is under severe stress. So it is possible that govt may direct IRCTC to reduce its booking/ food/cancellation charges to provide some respite. Being govt majority own, they can always take such decisions (similar any PSUs). This is the biggest risk for this stock IMHO
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Does IRCTC share a piece of the commission with them? I thought that Cleartrip, Paytm, Google Pay etc are doing it just to get some traffic onto their website. In short, it’s a customer acquisition ploy. IRCTC is a monopoly. It can dictate terms and honestly, doesn’t need any of these 3rd party apps to keep itself running. On the other hand, those 3rd party apps need IRCTC to get customers.
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Hi
There are two things
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Enabling ticket booking on platforms: This is done on 3P sites/apps. I do not know the latest regulation but this used to also require an RDS mechanism earlier.
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Pure payment option on IRCTC website: This the payment providers essentially have to pay depending on the instruments and the payment framework which is enabled.
IRCTC cannot charge transaction fee to customers directly. The payment instrument charges the fee which is shared in a specified proportion with IRCTC.
But the cost of payment is actually unfavorable to the payment partner net of fee paid to IRCTC. Atleast thats what my understanding is.
These are all in open public domain. You can check the regulations on IRCTC website itself.
Rgds.
Disc: Have a small position.
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Yes you are right, they need IRCTC, in-fact they can’t do without IRCTC registered users, they require IRCTC user credentials at the end!
Ticket price marked as 100 by railway is quotes at 120 by IRCTC(assume 20% premium) and 132 by PayTM(assume 10% premium).
Payment partner charges a nominal 2%, I assume website with such large transactions would be charged even less.
To explain the technicals of ticket booking whole of the backend is managed by CRIS, BroadVision a NASDAQ listed entity used to do it earlier.
https://medium.com/@kirtika.singh29/irctcs-digital-transformation-a-theory-of-change-75944c29c354
CRIS was a part of Indian Railway, but later the railway board directed them to report to IRCTC
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The Indian Railways will be gradually starting passenger train operations from May 12, initially, with 15 pairs of trains (30 return journeys), the government has said.
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Just few rough calculations here.
[1] Lets have a look at current valuation. At CMP 1304, its PE is 76.50
[2] IRCTC’s net profit break-up is (ref: IPO dcoument https://bit.ly/2AiUDrL) -
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42% from i-ticket bookings,
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32% from catering,
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8% from railneer and
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6% from tourism .
Out of these, I expect 38% profit (catering + tourism) to remain affected for sometime. Now, even if we assume that railway starts operating at 100% capacity from 20th may, say (just a guess) that would mean a loss of ~13.5% (50days out of 365days) of revenue.
Further, let us assume that there will be ~33% revenue loss from catering and tourism business (just a guesstimate). This means further loss of ~11% (ie 33% loss in ‘38% business operated for 86.5% of days’ ie 33% of 32.87% ie ~11%). This means just with simple calculations - I’m expecting ~24.5% (13.5+11) of loss in PAT.
After looking at these numbers, IRCTC’s current valuation of 76PE looks very high to me.
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Railways has started operating just 15 out of 13452 (ref: Indian Railways: Network, Investments, Market Size, Govt Initiatives | IBEF) passenger trains. Mathematically, its just 0.11%. Still, IRCTC is locked in upper-circuit at a PE of 80 (CMP 1368.70) 
.
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That is the reason why PE is not very helpful in such disruptive situations. PE should be calculated based on steady state earnings over a period of time. Others wise we may need other parameters like DCF over the life of the company, or ability to generate and deploy cash for the next 5-10 years or whatever we are comfortable with. For a company like say DMart if profits fall 50% over the year the PE may show up as 250. But that is not a real reflection on the company’s ability to generate returns on capital.
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Agreed Sir, PSUs don’t trade at unnecessarily high PEs. We have seen in past as well whenever any ipo of PSU comes they trade at such high PEs for example Hudco when ipo came it used to trade at 90Rs. but now after 3 years of listing it trades at merely 21Rs. Another similar case is of PNB housing finance stock which came down 90%.
No doubt IRCTC is monopoly business but such high PEs of 80 isn’t justified, definitely this stock is being operated by operators because across the globe all travel related companies have come down drastically from its highs
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If you look into the shareholding pattern of DEC19 and MAR20, Mutual fund holding get reduced from 4.78 to 2.05%, i.e., they have taken out more than half of the funds.
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Q1 gets washed away with only Shramik & Special trains proposed to run till 30th June. All other trains and their bookings stand cancelled for this quarter
With resumption of services the price movement started with continuous UCs… it will be interesting to watch the developments now
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There are now multiple short term issues with IRCTC.
- We are still in uncertainty phase as to when all the trains would restart. It could be few weeks or months or even more.
- Resumption of services is very much linked to decline in positive Virus cases.
- Even if the services start, travellers will be cautious for various things stating from travel, food, water etc for at least next 12 months and I don’t think IRCTC will have same financial performance as they had in the previous years.
- In spite of expected washout in revenues/profits in next few quarters, it is trading at very rich valuations which it doesn’t deserve at all.