Prabhudas Lilladher has retained a BUY rating for Indian Railway Catering and Tourism Corporation (IRCTC IN) with a target price of Rs 840, slightly revised down from earlier Rs 850. The report highlights a mixed quarterly performance with a 7.7% year-on-year revenue growth driven mainly by catering and tourism services. EBITDA margin came slightly below estimates, impacted by increased tourism expenses. Strong e-ticketing penetration at 89%, capacity expansions in Rail Neer plants, and entry into MICE business underpin future growth expectations. The firm anticipates sales and PAT CAGR of 7% and 9%, respectively, with IRCTC trading at a premium PE multiple (37x FY27E EPS). Overall, the report advises investors to accumulate the stock with upside potential supported by solid fundamentals and robust return ratios.

Mixed Quarterly Performance Overview

The quarter saw total revenue rise 7.7% YoY to Rs11,460 million, slightly below the estimate of Rs11,641 million. Key revenue segments recorded variable growth: - Catering revenue grew 7.8% YoY to Rs5,197 million with EBIT margins at 12.9%. - Internet ticketing revenue increased 4.0% YoY to Rs3,859 million with high EBIT margin of 84.7%. - Rail Neer sales expanded 4.3% YoY to Rs941 million but with a margin dip to 9.2%. - Tourism revenue surged 20.2% YoY to Rs1,495 million, though EBIT margin receded to 6.8% due to increased costs. EBITDA grew 8.4% YoY to Rs4,042 million, but fell short by 4.6% against estimates due to higher tourism expenses. PAT rose 11.1% to Rs3,420 million helped by elevated other income. After adjusting for a one-time income of Rs58 million, adjusted PAT was Rs3,362 million, showing 9.2% growth.

Operational Highlights Improving Future Prospects

- E-ticketing penetration is now at an impressive 89.2%, signaling strong digital adoption with ~136 million tickets booked this quarter. - Convenience fee income sustained at Rs2,520 million, contributing significantly to internet ticketing revenue. - Capacity expansion in Rail Neer bottling plants at Danapur and Ambernath from 1 lakh to 3 lakh bottles daily, along with plans for four new plants, sets the stage for volume-driven growth in the coming years. - IRCTC has ventured into the MICE (Meetings, Incentives, Conferencing, Exhibitions) segment with an 8% minimum margin target, focusing on government and PSU clients. - Tejas Express operations showed promising profitability (Rs34 million profit on Rs373 million revenue), with occupancy rates of 87% and 56% on key routes. - Addition of RBL Bank as a co-branded card partner and 26.7% growth in loyalty card revenue to Rs154 million point to ancillary revenues strengthening.

Financial Forecast and Key Ratios

The research house like Prabhudas Lilladher expects steady growth and solid return metrics:

IRCTC trades richly at a PE of 37x-35x based on FY27E and FY28E EPS estimates, reflecting investor confidence in robust return ratios (RoE averaging above 30%). Sales and PAT are forecasted to grow at a CAGR of 7% and 9%, respectively, indicating consistent operational scaling.

Valuation and Stock Levels

Prabhudas Lilladher values IRCTC IN at Rs840 per share, based on a 44x multiple on FY27E EPS, marginally lowering the previous target of Rs850 to factor near-term pressure on margins. The current market price of Rs710 opens a significant upside for investors with a favorable risk-reward balance.
Stock Technical Levels for Traders and Investors:

Support levels: Rs690 - Rs670 (key psychological and technical price floors)

Resistance levels: Rs750 - Rs780 (intermediate hurdles in upward journey)

Target Price: Rs840 (medium-term upside target aligned with fundamental valuation)

Investors may consider accumulation on dips towards support zones while traders watch for breakouts above resistance for momentum plays.

Bottomline for Investors

While the latest quarter delivered a mixed bag with margin contraction in tourism and rail neer segments, the company's strategic capacity expansions and digital penetration fortify its medium-term outlook. IRCTC remains well-positioned to capitalize on rising travel and catering demands, underpinned by a diversified revenue mix and healthy financial ratios. Prabhudas Lilladher reaffirming a BUY stance signals confidence in steady earnings growth and strong cash flows, making this a compelling pick for quality-conscious investors.
At current valuations, IRCTC presents an attractive proposition with significant upside from Rs710 CMP to Rs840 target, buoyed by positive sectoral drivers and execution clarity. Investors are advised to leverage key support levels for entry with an eye on the target price for wealth appreciation.