IRCTC's Ebitda growth rate mirrors pace of a slow-moving train

Indian Railway Catering and Tourism Corp. Ltd (IRCTC)'s results for the three months ended March (Q4FY25) proved unimpressive versus expectations of a solid quarter due to the Mahakumbh event-related push. Ebitda growth was 6% year-on-year to ₹385 crore, with margin compressing by almost 100 basis points to 30.4%. A basis point is one-hundredth of a percentage point.
Recall that IRCTC had offered food service in Aastha Express to Ayodhya in Q4FY24 during the consecration 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 without catering facilities because the government's aim was to accommodate more passengers to Mahakumbh and also clear the subsequent 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 either, as the base quarter had an abnormally low margin. Sequentially, the margin was flat at 12%.
Also Read: KEC is making amends to repair margin, allay debt concerns
IRCTC's mainstay business remains internet ticketing, contributing about 75% of its total FY25 Ebit. The segment has two revenue streams of convenience fee (simply put, the online ticket booking charges) and non-convenience fee from advertising and ancillary services for buying food, travel insurance, etc.
Convenience fee grew 9% year-on-year as online ticket booking volume increased by 10%. While 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 using 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 on the average fee per ticket as the convenience fee is lower on payments made using UPI.
Bright spot
The tourism segment was the only bright spot in the results, which essentially is a packaged tour business offering options for religious 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.
Also Read: PMI: India's services exports bump may lose steam amid global economic gloom
For FY25, the two trains clocked revenue 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 trajectory, but the segment's past performance has been volatile.
Meanwhile, IRCTC is likely to get initial approval from the Reserve Bank of India (RBI) for a payment aggregation license within the next couple of months. However, even after the business starts, it would be tough to make inroads given the wafer-thin margin. The space is already crowded with well-entrenched players such as PhonePe and Razorpay.
High valuation
As such, the new business initiative is unlikely to change the trajectory of the stock, which is down 15% over the past one year even as the Ebitda CAGR over the last two years to FY25 has been 10%. 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.
Also Read: Ola Electric's new breakeven targets appear more like wishful thinking
Bloomberg consensus estimates show Ebitda growth in FY26 could 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 higher. Despite that, the valuation still remains expensive at EV/Ebitda of 33x based on Bloomberg consensus estimates for FY26.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

India.com

an hour ago

• India.com

This company shares gain after acquisition update

शेयर बाजार भी पाकिस्तान से कई गुना बड़ा Shares of NSE-listed Servotech Renewable Power System Ltd gained on Monday, i.e. June 23, 2025, even as equity benchmark indices tumbled in early trade amid rising tensions in the Middle East after the United States bombed three major nuclear sites in Iran. The counter started the session flat at Rs 138.77 but gained to touch the high of Rs 142.34 on the NSE. Last seen, the counter was trading at Rs 139.18 with a gain of 0.30. The stock hit its 52-week high of Rs 205.40 on September 26, 2024, and its 52-week low of Rs 84.88 on June 20, 2024. The market cap of the company is 3,129 crore. Company Shares Update On Acquisition The shares are in action as the company has informed exchanges about a strategic acquisition. In a move that underscores its long-term vision, the company has acquired a 27 per cent stake in New Delhi-based PV Module manufacturer Rhine Solar Ltd. This acquisition, valued at Rs 12.15 crore, is set to significantly enhance the company's backwards integration capabilities. 'As per the agreement, the Company will acquire 27% of the shareholding in Rhine Solar Limited at a post-money valuation, thereby marking a strategic investment aimed at strengthening our backward integration capabilities,' the company said in an exchange filing. As part of the deal, the company will acquire 9,50,106 equity shares of the company at Rs 127.88 per share. The indicative time period for completion of the acquisition is 90 days. Servotech Renewable Power System Share Price Shares of Servotech Renewable Power System have shown a promising trajectory, gaining 9 per cent in the past month. While the counter has corrected 18 per cent in the past six months, on a YTD (year-to-date) basis, the scrip has given a negative return of 17 per cent and has risen 62 per cent in one year. This upward trend is a positive sign for investors. Meanwhile, the company posted a two-fold rise in net profit to Rs 7.71 crore in the quarter ending March 31.

Business Standard

an hour ago

• Business Standard

PhonePe eyes $1.5 billion IPO, draft papers likely by early August

PhonePe, India's leading digital payments platform and a subsidiary of Walmart Inc, is preparing to file for an initial public offering (IPO) that could raise up to $1.5 billion. The move would value the fintech firm at approximately $15 billion, according to a report by Bloomberg. The fintech aims to submit its draft red herring prospectus (DRHP), a preliminary filing required by Indian regulators, by early August. However, the plan remains fluid and subject to change, as the discussions are still ongoing. To manage the IPO, PhonePe has enlisted the services of top investment banks, including Kotak Mahindra Capital, JPMorgan Chase, Citigroup, and Morgan Stanley. Founded in 2015, PhonePe has grown to become the dominant player on India's real-time payment system: Unified Payments Interface (UPI). The platform boasts over 610 million registered users and processes daily transactions worth around ₹340 million. In 2023, the company secured $100 million in funding from Ribbit Capital, Tiger Global Management, and TVS Capital Funds, with a valuation of $12 billion at that time. UPI transactions hit a record high in May 2025, clocking 18.68 billion in volume and ₹25.14 trillion in value, marking a 4 per cent rise in volume and 5 per cent in value over April. Leading the pack, PhonePe processed 8.68 billion transactions worth ₹12.56 trillion, accounting for nearly half of the total UPI activity. Google Pay followed with 6.74 billion transactions and ₹8.85 trillion in value, while Paytm trailed with 1.27 billion transactions. Together, PhonePe and Google Pay handled over 80 per cent of UPI transactions. PhonePe maintained its dominance both in volume and value, strengthening its position as it gears up for an IPO. PhonePe had originally been incorporated in Singapore but shifted its legal domicile to India in 2022. This move has been believed to be done in anticipation of its public filing in India. Earlier this month, the company added Zarin Daruwala to its board. Daruwala, the former CEO of Standard Chartered Bank India, led the bank from 2016 and previously held senior leadership roles at ICICI Bank, where she oversaw the wholesale banking division. PhonePe's board features a mix of global and Indian business leaders, including Walmart executives John David Rainey, Donna Morris, and Leigh Hopkins; TeamLease Services vice-chairman Manish Sabharwal; former Indian bureaucrat Tarun Bajaj; PhonePe chairman Rohit Bhagat; and the platform's co-founders Sameer Nigam and Rahul Chari.

Fashion Value Chain

2 hours ago

• Fashion Value Chain

JKLU Professor First Indian to Win Hills Millennium Award for International Designers

Prof. A Balasubramaniam, the founding Director of the Institute of Design at JK Lakshmipat University (JKLU) in Jaipur has become the first Indian to win the Hills Millennium Award 2025, a prestigious award for international designers presented annually by the UK-based Institute of Engineering Designers (IED). Prof. A Balasubramaniam, Director of the Institute of Design at JK Lakshmipat University (JKLU), is the first Indian to win the Hills Millennium Award for international designers Prof. Balasubramaniam was selected for the award in recognition of his lasting contributions to the field of product design. He will be felicitated on 12th July in Birmingham, UK. The Hills Millennium Award is given annually by IED to an international designer who has made major contributions to the professional areas of Engineering Design, and/or Product Design. Prof. Balasubramaniam has designed market-leading products, as diverse as tractors and torches, for industry leaders such as Eveready, Eicher, Usha, Hero Motors, Bajaj, and intergovernmental organisations such as UNDP. He was a consultant to National Innovation Foundation and NIIT. He also writes a popular blog on Design practice in India. The selection of Professor Balasubramaniam for Hills Millennium Award 2025 is a testament to the growing influence of Indian designers at the world stage. 'Indias design ethos – rooted in centuries of craft, innovation, and cultural heritage – has long shaped global sensibilities, often without due recognition. That is why it is heartening to see the international design community acknowledge this legacy by honouring Prof. Balasubramaniam with the Hills Millennium Award,' said Professor Alka Mahajan, Pro Vice Chancellor, JK Lakshmipat University. An alumnus of National Institute of Design, Ahmedabad, he had served as the National President of ADI (Association of Designers of India) from 2022-24. Before joining the Institute of Design at JK Lakshmipat University, he was the Dean of IILM School of Design in Gurgaon from 2007 to 2010 and has also been a member of the Academic Board for several design institutes, including the School of Planning and Architecture, New Delhi (SPA New Delhi) and Nirma University. 'I am deeply honoured and humbled by the Institute of Engineering Designers' recognition. This prestigious award is not just a personal achievement, but a reflection of the collective effort to expand the global design dialogue. I truly believe this recognition signals a critical shift toward a more inclusive narrative in design – one that values and amplifies the diverse voices and traditions shaping our field,' Prof. Balasubramaniam said on winning the award. Past winners of the Hills Millennium Award include the legendary automative designer Frank Stephenson, the designer behind some of the world's most iconic cars, including the 2001 MINI Cooper, Ferrari F430, and McLaren P1, among others. Other awardees include Dorian Marjanovic, Professor Emeritus at University of Zagreb; veteran engineering design professional Crispin Hales; and Marcus Engman, Creative Director at IKEA Retail. The Institution of Engineering Designers is a British professional engineering institution founded in 1945.