Reduce Indian Railway Catering and Tourism Corporation; target of Rs 811: Prabhudas Lilladher

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26 Aug, 2025 12:21

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

We cut our FY25E/FY26E EPS estimates by 1%/2% and downgrade Indian Railway Catering & Tourism Corporation (IRCTC IN) to ‘REDUCE’ (earlier HOLD) as we 1) re-align margin assumptions for the internet ticketing division given rising UPI share and 2) tweak our depreciation forecast amid capitalization of the new office building. IRCTC’s operational performance was below estimates with EBITDA margin of 31.4% (PLe 34.2%) led by a margin miss in the catering and internet ticketing divisions. We expect PAT CAGR of 8% over FY24-FY26E led by growth in the catering, rail neer and tourism divisions. IRCTC trades at 63x/60x our FY25E/FY26E EPS estimates, and we believe current valuations are expensive in light of 8% PAT CAGR over the next 2 years.

Outlook

We downgrade to ‘REDUCE’ with a TP of Rs811 (earlier Rs825) after assigning a multiple of 47.5x (unchanged) over FY26E EPS. Earnings delta arising from catering division can result in earnings upgrade and is a key risk to our call.

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Indian Railway Catering and Tourism - 30052024 - prabhu