Buy Indian Railway Catering and Tourism Corporation target of Rs 2329: Prabhudas Lilladher

An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Indian Railway Catering and Tourism Corporation

While our FY22E estimates have undergone a massive revision as travel is disrupted due to 2nd wave our FY23E estimates are broadly intact as we expect ticketing volumes to breach pre-COVID levels amid incremental delta coming in from conversion of certain unreserved coaches into the reserved category. Additional volume lever is not ruled out from rise in e-booking penetration (reached ~90%+ amid COVID; up from ~70-75% levels prevailing pre-COVID) as it can be sticky in nature. On the catering front, we believe even if complete migration happens towards ready-to-eat (RTE) meals postCOVID, there may not be substantial business loss as RTE menu has already been expanded.

Outlook

We continue to maintain our positive stance on the stock and arrive at a revised TP of Rs2,329 (Rs2,179 earlier) as we increase our P/E multiple to 38x (36x earlier) and roll forward our valuation to Sep 23E. Earnings optionality arising from 1) railway privatization (IRCTC has qualified for 11 clusters) 2) non-convenience income (especially pertaining to payment gateway) and 3) potential in e-catering business (commission increased from 12% to 15%) gives us additional comfort. Retain BUY.

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