IRCTC shares down nearly 2% after Q1 results, PL Capital retains buy

Indian Railway Catering and Tourism Corporation (IRCTC) shares experienced a slight decline, falling 1.38 percent to ₹497.50, after reporting Q1FY27 results. Despite a year-on-year increase of 18 percent in consolidated revenue, reaching ₹1,369.52 crore, and a nearly flat consolidated profit after tax of ₹330.16 crore, the stock faced negative sentiment.

PL Capital, a brokerage firm, cited weak operational performance, highlighting an EBITDA margin of 28.2 percent, falling short of their estimate of 33.4 percent. This margin drop was attributed to a one-time employee cost hit of ₹2 crore, input cost inflation, and maintenance charges within the ticketing division. However, IRCTC's standalone profit after tax rose to ₹329.86 crore, up from ₹303.45 crore in the previous year.

PL Capital noted strong performance in the catering division, driven by growth in prepaid trains, license fees, e-catering, and election special trains. The brokerage anticipates an 11 percent CAGR in sales over FY26-FY28E, supported by capacity expansion at Rail Neer and healthy growth in the catering sector. PL Capital expects EBITDA margins of 30.9 percent and 30.5 percent for FY27E and FY28E, respectively, as the share of lower-yielding catering business increases.

Despite these positive growth prospects and a debt-free balance sheet, PL Capital maintains a buy rating with a target price of ₹706 for IRCTC shares.