Hold Indian Railway Catering and Tourism Corporation; target of Rs 679: Prabhudas Lilladher

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

While we increase our FY24E/FY25E revenue estimates by ~4% odd as we tweak our tourism segment projections to incorporate benefits of Bharat Gaurav initiative, our EPS estimates broadly remain intact given it is a relatively low margin business. Indian Railway Catering & Tourism Corporation’s (IRCTC IN) results were broadly in-line with revenues of Rs9,650mn (PLe Rs9,442mn) and EBITDA margin of 33.6% (PLe 36.0%). We expect sales/PAT CAGR of 11%/13% over FY23-FY25E given 1) traction in non-convenience revenue 2) rail neer expansion and 3) Bharat Gaurav initiative. IRCTC trades at 44x/41x to our FY24E/FY25E EPS estimates and we believe current valuations are fair in absence of meaningful growth levers.

Outlook

Consequently, we maintain our ‘HOLD’ rating on the stock with a TP of Rs679 (45x Sep-24 EPS of Rs15.1). We have changed our valuation methodology (earlier DCF) considering sufficient trading history to benchmark and our target P/E multiple is broadly in-line with past average (refer exhibit 3 for more details).

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