IRCTC shares dive 5% as Q4 misses estimates

Shares of Indian Railway Catering and Tourism Corporation (IRCTC), the ticketing, catering, and tourism arm of Indian Railways, tumbled 5% in intraday trade on Wednesday after the state-owned company reported lower-than-expected earnings in the March quarter of 2024. Post Q4, Prabhudas Lilladher has given a ‘HOLD’ rating on IRCTC, with a target price of ₹825, saying that the PSU stock trades at 66.1x than its FY25E earnings per share (EPS) estimate.

Extending losses for the fifth straight session, IRCTC shares opened lower at ₹1,046.95, down 3.3% against the previous closing price of ₹1,082.70 on the BSE. Extending opening losses, the railway stock dropped as much as 5% to ₹1,028 amid a spurt in volume trade. The market capitalisation of the PSU stock dropped to ₹82,976 crore, with 2.3 lakh shares changing hands over the counter as compared to a two-week average volume of ₹1.58 lakh stocks by 11:30 AM.

The stock has fallen 9% in five sessions from ₹1,134 on May 22 as investors booked profit at higher levels.

At the day’s low level, the share price of IRCTC trades 10.5% lower than its 52-week high of ₹1,148.30 touched on May 22, 2024, while it has risen 67% against its 52-week low of ₹614.45 hit on July 13, 2023. In the last year, the large-cap stock has surged 61%, while it rallied 48% in six months. The stock has corrected 1% in the past month.

For the fourth quarter ended March 31, 2024, IRCTC posted a net profit of ₹284 crore, up 2% from ₹279 crore in the corresponding period last year, on higher ticket sales. The revenue grew 20% to ₹1,155 crore compared to ₹965 crore in the year-ago period. On an operating level, the railway PSU's EBITDA was at ₹362.4 crore, up 11.6% from ₹324.6 crore in the same period last year. Margin dropped to 31.4% from 33.6% in the year-ago period.

Segment-wise, the contribution of internet ticketing to overall revenue fell to 31% from 32.8% last year, while the catering business, the second-largest revenue contributor, reported a growth of 34.1% to ₹530.8 crore during the quarter under review. The Rail Neer packaged drinking water unit reported revenue growth of 13.1% to ₹83 crore, while the tourism unit posted an 11.6% rise in revenue to ₹154.6 crore.

The board of IRCTC also declared a final dividend of ₹4 per share for the financial year 2023-24, at 200% of the paid-up share capital of face value of ₹2 each, amounting to ₹256 crore. This is in addition to the interim dividend of ₹2.50 per share paid in November 2023 for FY24.

At the current price level, IRCTC’s dividend yield is 0.44%. The company, having a good track record of paying dividends, has declared an equity dividend of ₹4.50 per share in the past 12 months and 8 dividends since February 2020. 

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