IRCTC’s Ebitda Growth Rate Mirrors Pace of a Slow-Moving Train

Recall that IRCTC had offered food service in aastha express to ayodhya in Q4Fy24 during the conference ceremony of the Ram temple. Thus, there was hope that it would be done for Mahakumbh Special Trains, Too. In the Q4Fy25 Earnings Call, The Management Clarified that these trains operated with Catering facilities against the government’s aim waste more passengers to mahakumbh and als Rush from there.

The outcome: IRCTC’s Catering Revenue was unchanged Year-On-Year at 529 Crore. The segment’s Profitability Improvement Isn’T Impressive Eiter, as the base Quarter Had an abnormally low margin. Sequestly, The Margin was flat at 12%.

IRCTC’s Mainstay Business Remains Internet Ticketing, Contributing About 75% of its Total FY25 Ebit. The segment has two revival streams of convenience fee (Simply put, the online ticket booking charges) and non-convenience fee from advertising and ancillary services for bearing food, travel

Convenience Fee Grew 9% Year-On-Year as Online Ticket Booking Volume Increased by 10%. Who Volume Growth is not a problem, the concern here is about the 7% Quarter-on -Quarter Fall in Average Fee Per Ticket to 18.6.

The fee is different for ac and non-ac-ticket booking, and also for booking payments made unified payments interface (upi) or other modes that include netbanking and cards. The share of UPI-Based Payments Has Been Steadily Climbing Up, From 45% in Q1Fy25 to 47.7% in Q4FY25, which puts pressure pressure on the average fee per ticket as the convene Made using upi.

Bright spot

The tourism segment was the only bright spot in the results, which is essentially is a packaged tour business offering options for reliative and luxurious tours. Tourism ebit soared by 161% on-year to 50 Crore with Margin Almost Doubling to 18.1% in Q4FY25. Bharat Gaurav Train and Maharaja Express have contributed to the growth.

For fy25, the two trains clokked revons of 277 Crore and 92 Crore, respectively. While Bharat Gaurav’s Revenue is Higher, its Margin is Lower at 8% Versus 18% of Maharaja Express, as the Former Operates in the Affordable Segment and the Latter in the Luxurious Travel Category. The management is optimistic that the tourism segment will maintain its upward trafficory, but the segment’s past performance has been valtilized.

Meanwhile, IRCTC is Likely to get initial approval from the reserve bank of India (RBI) for a payment agreagation license with the next couple of months. However, even after the business starts, it would be tough to make inroads in the wafer-thin margin. The space is alredy crowded with well-edged players such as phonePe and razorpay.

High Valuation

As such, the new business initiative is unlikely to change the track, which is down 15% over the past one year even as the ebitda cagr over the last two year to fyer. The decline in the stock is thus indicative of the correction in its rich Valuation. Ebitda is short for earnings before interest, taxes, depreciation, and amortisation.

Bloomberg Consensus Estimates Show Ebitda Growth in FY26 Cold Go up to 18%, which appears a tad optimistic. The Decline in Stock Price Pushes The Enterprise Value (Ev) (Numerator in Ev/Ebitda) Lower, While Optimistic EBITDA Estimates push the denominator. Despite that, The Valuation Still Remains Expected At Ev/Ebitda of 33X based on Bloomberg Consensus estimates for fy26.