Prabhudas Lilladher has given Buy recommendation for Indian Railway Catering and Tourism Corporation with a target price of Rs. 2329 in its research report issued on Jul 01, 2021

Prabhudas Lilladher’s research report on Indian Railway Catering and Tourism Corporation

While our FY22E estimates have undergone a massive revision as travel is disrupted due to 2nd wave our FY23E estimates are broadly intact as we expect ticketing volumes to breach pre-COVID levels amid incremental delta coming in from conversion of certain unreserved coaches into the reserved category. Additional volume lever is not ruled out from rise in e-booking penetration (reached ~90%+ amid COVID; up from ~70-75% levels prevailing pre-COVID) as it can be sticky in nature. On the catering front, we believe even if complete migration happens towards ready-to-eat (RTE) meals postCOVID, there may not be substantial business loss as RTE menu has already been expanded.


We continue to maintain our positive stance on the stock and arrive at a revised TP of Rs2,329 (Rs2,179 earlier) as we increase our P/E multiple to 38x (36x earlier) and roll forward our valuation to Sep 23E. Earnings optionality arising from 1) railway privatization (IRCTC has qualified for 11 clusters) 2) non-convenience income (especially pertaining to payment gateway) and 3) potential in e-catering business (commission increased from 12% to 15%) gives us additional comfort. Retain BUY.