Buy Railway Catering and Tourism Corporation; target of Rs 1629: Prabhudas Lilladher

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

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

We cut our FY21E EPS estimates by 50% given the uncertainty in timeline regarding complete resumption of rail services. However, our FY22E/FY23E estimates are broadly intact as 1) resumption of Tejas Express from 17th Oct and 2) increase in convenience revenue to ~25% of the pre-COVID levels in 2QFY21 signal that normalcy is expected to resume within next 6-8 months. We thus expect sharp bounce back in FY22E as capacity expansion of Rail Neer and the impact of price hike announced in catering will play out by then. However, given the current situation we expect IT & pantry car modernization capex plan to get delayed and have tweaked our assumptions accordingly. We now expect IT capex outgo of Rs2bn odd to be spread over 3 years versus 2 years in the earlier case, with no spends whatsoever in FY21E. We believe IRCTC is a perfect play on the unlocking theme with gradual relaxations in travel restrictions. Valuations at 27x FY22E and 24x FY23E look challenging but will sustain given 1) monopolistic nature of the business 2) clear growth traction (20% PAT CAGR over 3 years) and 3) strong return ratios & healthy BS.

Outlook

We maintain BUY with revised TP of Rs1,629 (earlier Rs1,647) by valuing the stock at a P/E multiple 28.5x (no change) our estimated FY23E EPS of Rs57.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More