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

IRCTC’s top-line/PAT was 6%/9% below our estimates due to lower than expected revenue from catering & rail neer division coupled with EBIT losses of Rs99mn in tourism segment. Despite weaker than expected results we increase our EPS estimates by ~6- 7% over FY23-FY25E as we realign our sales and margin assumptions for internet ticketing division given continued traction in non-convenience revenue. As FY23E is likely to witness majority of the benefits of catering price hike & rail neer expansion, growth challenges would emerge going ahead, given 2S reversal is already into effect now. Accordingly, we expect sales/PAT CAGR of 8%/9% respectively over FY23-FY25E. IRCTC trades at 55x/51x our FY24E/FY25E EPS estimates and we believe current valuations are pricey in absence of meaningful growth levers.

Outlook

Consequently, we maintain our HOLD rating on the stock with a DCF based TP of Rs679. At our TP, stock is implicitly valued at 48.5x Sep-FY24EPS of Rs14.

For all recommendations report, click here