Target: ₹745
CMP: ₹670.20
Indian Railway Catering and Tourism Corporation (IRCTC) revenues increased by 23.5 per cent y-o-y primarily led by 29 per cent y-o-y increase in catering and 63 per cent y-o-y growth in Tourism revenues. There is a pipeline of 200 trains for train side vending and 451 Vande Bharat trains can be added in the coming years. As a result we are building robust growth in catering and Tourism revenues resulting in CAGR growth of 18 per cent and 29 per cent over FY23-FY25.
The company has added one new rail neer plant in Kota and will commission two new plants in Q3-FY24. As a result we have built in 11 per cent revenue CAGR for rail neer over FY23-FY25.
We believe higher contribution from low margin catering and tourism will dent margins in long term. However, we expect margins to remain above pre-covid levels in near term.
We have kept our estimates unchanged and hence we are keeping our target price unchanged at ₹745 (45x FY25 EPS). However, considering recent run up in price we downgrade the stock from Buy to Hold.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.