IRCTC Share Price: Top Railway Stock Gets Rating Downgrade By Prabhudas Lilladher; Target Price Cut To Rs 825

Indian Railway Catering and Tourism Corporation Ltd (IRCTC) stock price has flourished since 2023. In a year, the stock is up by 54% on BSE, while in 2024 so far, it has given double-digit returns of 14%. IRCTC has the highest return on equity in railway baskets. However, brokerage Prabhudas Lilladher has downgraded its rating on IRCTC while reducing the target price as well.

On BSE, IRCTC's share price ended at Rs 1015.55 apiece, broadly flat on June 20 with a market cap of Rs 81,244 crore.

The stock's 52-week high and low is at Rs 1,148.30 apiece and Rs 614.45 apiece on BSE. The stock's PE is at 73.11x, and the return on equity is at 34.40%.

In its latest research report, brokerage Prabhudas Lilladher said, "Catering EBIT margins sharply slipped to 8.7%, while Internet ticketing EBIT margin decreased due to rising share of UPI transactions that have lower yield, leading to lower than expected operational performance."

Prabhudas believes the stock is expensive. It said, "IRCTC trades at 61x/57x our FY25E/FY26E EPS estimates, and we believe current valuations are expensive in light of 8% PAT CAGR over the next 2 years."

Hence, Prabhudas downgraded its rating to 'REDUCE' from 'HOLD' to a target price of Rs 825.

As per Axis Securities, in the last 1 year, Indian Railway Catering & Tourism Corporation Ltd has beaten the Nifty 100 by 22.36% (CAGR difference). However, since last year, the volatility of IRCTC has been Higher than Nifty 100 volatility by 1.42%. For 5 out of the Last 12 Months, i.e. 42% of the time it has beaten Index returns.

With Miniratna status, IRCTC is an extended arm of the Indian Railways to upgrade, professionalize and manage the catering and hospitality services at stations, on trains and other locations and to promote domestic and international tourism through the development of budget hotels, special tour packages, information & commercial publicity and global reservation systems.

Going ahead, the railway giant has announced a Final Dividend of Rs.4/- per share of the face value of Rs. 2/- each for the financial year 2023-24 @200% of the paid-up share capital, subject to the approval of shareholders in the forthcoming annual general meeting.

Notably, this final dividend is in addition to an interim dividend payout of Rs 2.50/- per share or @125% of the paid-up share capital declared by the Board of Directors in November 2023 and already paid to the shareholders.

In Q4FY24, IRCTC earned a net profit of Rs 284.18 crore, up from Rs 278.79 crore in Q4FY23 but lower than Rs 299.99 crore in Q3FY24. Meanwhile, revenue from operations stood at Rs 1,154.77 crore, registering growth compared to revenue of Rs 965.01 crore in Q4FY23 and Rs 1,118.30 crore in Q3FY24.

FY24 PAT is at Rs 1,111.07 crore, and revenue came in at Rs 4,270.17 crore compared to FY23 PAT and revenue of Rs 1,005.88 crore and Rs 3,541.47 crore.

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