IRCTC shares: Lack of immediate catalysts, margin pressure key concerns for PSU stock

IRCTC has reported a muted quarterly performance, with its revenue increasing by 4% quarter-on-quarter (QoQ) and 10% year-on-year (YoY). This growth was hampered by seasonal weaknesses in its catering segment, which saw a 5% QoQ decline, and a stagnant performance from its Rail Neer business. A significant contraction in operating margins by 350 basis points was primarily due to a notable 230 basis points decrease in margins from the internet ticketing segment, a traditionally high-margin area for the company. Despite these challenges, the management remains positive about future growth opportunities with premium trains like the Tejas Express, Bharat Gaurav, and Maharaja Express, alongside continued tourism momentum, especially in religious travel.

In Q4FY25, IRCTC's revenue reached Rs12,685 million, marking a 10.1% YoY and 3.6% QoQ growth, driven by the catering and tourism sectors. However, the company's EBITDA grew by 6.4% YoY but declined by 7.5% QoQ to Rs3,855 million, with margins contracting to 30.4%, a reduction of 108 basis points YoY and 363 basis points QoQ. The adjusted PAT increased by 13.1% YoY but decreased by 8.4% QoQ to Rs3,126 million. The company is actively looking to increase its non-railway revenue, currently contributing around 28%, by expanding into hotel bookings and MICE (Meetings, Incentives, Conferences, and Exhibitions).

Additionally, IRCTC anticipates an RBI approval for a payment aggregator licence in the next quarter, which could provide a long-term growth catalyst. This strategic move is expected to contribute significantly to revenue from FY27 onwards. Despite acknowledging its long-term strengths, brokerage Way2Wealth recommended a 'Hold' on the stock due to short-term margin pressures and the absence of immediate growth catalysts. The company is currently trading at a price-to-earnings ratio of 33.3x FY27E, the brokerage said. 

IRCTC shares climbed 1.37% to Rs 766.20 in the previous session on BSE. IRCTC shares touched a 52 week high of Rs 1,048.75 on June 3, 2024 and fell to a 52 week low of Rs 655.20 on March 3, 2025. Market cap of the firm rose to Rs 61,296 crore.