The shares of this monopoly stock are in focus after the government plans to increase railway ticket fares. This is the first fare hike after the disastrous COVID pandemic. In this article, we will discuss more on this.
With a market capitalisation of Rs 61,532 crores, the shares of Indian Railway Catering & Tourism Corporation Ltd (IRCTC) are currently trading at Rs 769 per share, down by 27.42 percent from its 52-week high of Rs 1,059.45 per share. Over the past five years, the stock has delivered a return of 178 percent.
Effective July 1, 2025, the government will hike non-AC Mail/Express train fares by 1 paise per kilometre, and AC class fares will rise by 2 paise per kilometre. However, there will be no increase in fares for suburban tickets and second-class travel up to 500 kilometres. For distances beyond 500 kilometres, the increase will be half a paise per kilometre. Also, there will be no change in monthly season ticket fares.
The fare hike is favourable for IRCTC, as it will positively impact the revenues from the ticketing segment, which is a major contributor to the profits of IRCTC. In addition to better ticket income, typically higher ticket prices also see higher commission income for IRCTC, as they earn a fee on every ticket from the platform.
Increased revenues from rail travel can then also result in greater investments in tourism, catering, etc., which positively affect IRCTC’s other verticals. This also signals operational normalisation following COVID, which is a long-term positive growth signal.
Financial Highlights
The company reported a revenue of Rs 4,675 crores, up by 9.48 percent from its FY24 revenue of Rs 4,270 crores. Additionally, the company reported a net profit growth of 18.36 percent to Rs 1,315 crore in FY25 from Rs 1,111 crores in FY24.
The stock delivered an ROE and ROCE of 37.18 percent and 49 percent respectively, and is currently trading at a P/E of 48x as compared to its industry average of 35.89x.
Indian Railway Catering & Tourism Corporation Ltd (IRCTC) operates through four major segments: catering & hospitality, internet ticketing, travel & tourism, and packaged drinking water.
IRCTC operates catering services on premium trains (Vande Bharat, Rajdhani, and Shatabdi). As part of this segment, it also manages food plazas, lounges, retiring rooms, and hotels.
In terms of tourism, IRCTC offers domestic and international tour packages, charter trains, and event management. IRCTC operates the online ticketing platform and tourism portal, and it also sells packaged drinking water branded as ‘Rail Neer’.
Written by Satyajeet Mukherjee
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