Target: ₹679

CMP: 649.45

While we increase our FY24/FY25 revenue estimates Indian Railway Catering & Tourism Corporation (IRCTC) buy about 4 per cent 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.

IRCTC results were broadly in-line with revenues of ₹965 crore(PL estimates ₹944.20 crore) and EBITDA margin of 33.6 per cent(PLe 36 per cent). We expect sales/PAT CAGR of 11 per cent/13 per cent over FY23-FY25 given: traction in non-convenience revenue; rail neer expansion; and Bharat Gaurav initiative.

IRCTC trades at 44x/41x to our FY24E/FY25 EPS estimates and we believe current valuations are fair in absence of meaningful growth levers. Consequently, we maintain our ‘Hold’ rating on the stock with a TP of ₹679 (45x Sep-24 EPS of ₹15.1). Previous target price was ₹672.

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).