Buy Indian Railway Catering and Tourism Corporation; target of Rs 864: Prabhudas Lilladher

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

IRCTC reported weak set of numbers with EBITDA margin at multi-quarter lows of 30.4% (PLe 32.6%)led by miss in the catering division and elevated employee & other expenses. However, PAT was aided by an exceptional gain of Rs457mn. Despite a subdued performance in 4QFY25, we expect catering division to report 13% top-line CAGR over the next 2 years led by 1) rising e-catering volumes, 2) potential in non-railway catering and 3) launch of Vande Bharat trains. As for internet ticketing, we expect non-convenience pie to drive topline while addition of 3 new plants will provide growth kicker to Rail Neer division.

Outlook

We broadly maintain our estimates and expect sales/PAT CAGR of 11% over the next 2 years. Retain BUY on the stock with a TP of Rs864 (44x FY27E EPS; no change in target multiple).