Hold Indian Railway Catering and Tourism Corporation; target of Rs 700: Prabhudas Lilladher

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

Though we increase our FY24E/FY25E revenue estimates by 4%/5% respectively as we tweak our projections for catering segment amid strong beat of 20% in 1QFY24, our EPS estimates broadly remain intact given it is a relatively low margin business. Indian Railway Catering & Tourism Corporation’s (IRCTC IN) top-line of Rs10,018mn was better than our estimates with an EBITDA margin of 34.2% (PLe 36.1%), but PAT was impacted by a one-off charge of Rs519mn. We expect sales/PAT CAGR of 14%/13% over FY23-FY25E given 1) traction in non-convenience revenue 2) rail neer expansion (4 plants to be operationalized soon) and 3) healthy growth in catering segment led by extension of services to more trains (200 contracts already in pipeline).

Outlook

IRCTC trades at 44x/42x our FY24E/FY25E EPS estimates and we maintain our ‘HOLD’ rating on the stock with a TP of Rs700 (45x FY25E EPS).

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