IRCTC (IRCTC.NS) Shares Plunge 5% as Q4 Net Profit Misses Market Expectations

• Indian Railway Catering and Tourism Corporation Ltd (IRCTC) share price declined more than 5% in morning trades post Q4 results announced by the company after the market hours on Tuesday.
• The reported net profit by IRCTC at ₹284 Crore grew 2% year on year compared to ₹279 crore in the same period last year.
• IRCTC’s net profit was impacted by an exceptional charge of ₹7.9 crore due to excess provisions written back for previous years relating to various expenses.

IRCTC shares fall over 5% as Q4 net profit growth misses estimates, despite revenue boost from catering and internet ticketing.

Net profit misses estimates

The reported net profit, however, was also impacted by an exceptional charge of ₹7.9 crore due to excess provisions written back for previous years relating to various expenses.

Adjusting for the same and all other one-offs, the net profit as per Prabhudas Lilladher analysts’ calculations came at ₹276.3 crore. This, though up 9.2% year on year, missed Prabhudas Lilladher analysts’ estimates of ₹306.6 crore. The profit margins at 23.9% also missed the estimates of 27.1%, as against 26.2% and 28.1% in 4QFY23 and 3QFY24 respectively.

On the operational front, earnings before interest, taxes, depreciation, and amortization (EBITDA) for the railway PSU increased to ₹362.4 crore from ₹324.6 crore in the same period the previous year, an increase of 11.6%. The margin, however, at 31.4%, declined from 33.6% during the same period last year.

The EBITDA margins also came lower than estimates as analysts at Prabhudas Lilladher said that they expected an EBITDA margin of 34.2%. The miss in margins was led by higher-than-expected other expenses, said analysts.

Catering, Internet Ticketing drive revenue growth

The e-ticketing and catering company of the Indian Railways, IRCTC, recorded a 19% increase in operating revenue to ₹1,155 crore in the March quarter, up from ₹965 crore in the same period last year.

The revenue growth for IRCTC is being led by core catering and internet ticketing business while smaller segments such as Rail Neer and Tourism also supported, though with slower growth.

Rail catering revenues at ₹530 crore grew 34.1% YoY while internet ticketing revenues at ₹342 crore grew 16% year-on-year. Tourism revenues at ₹154.7 crore grew 11.6% year-on-year while Rail Neer revenues at ₹83 crore also improved 13.1% YoY. The Rail Teerth revenues, however, declined. Nevertheless, on the positive side, all the segments see positive Earnings before interest tax (EBIT).

Conclusion

In summary, while IRCTC’s Q4 results showed a modest increase in net profit and a significant boost in revenue driven by its core catering and internet ticketing segments, the overall performance fell short of market expectations. The impact of exceptional charges and higher-than-expected expenses led to a miss in profit and EBITDA margin estimates. Investors will be closely watching how IRCTC manages its costs and continues to drive growth in its core segments in the upcoming quarters.