IRCTC’s journey can be pleasant if non-convenience fee surprises

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₹305 crore. It should be noted that the company’s profit had grown at a CAGR of 33% over FY22-FY24. Interestingly, IRCTC is one of the few public sector stocks that is still quoting below its high of ₹1,279 apiece made on 19 October 2021 even as the S&P BSE PSU Index has more than doubled since then.

Consequently, the one-year forward price-to-earnings multiple of IRCTC’s shares has dropped to 54x based on Bloomberg consensus estimate for FY25, from a high of over 100x two years ago. The dull performance of the shares epitomizes the perils of investing in a stock with extremely high valuation to begin with, despite the company’s monopoly in railway internet ticket booking. Q1FY25 results show that the internet ticketing segment still contributes nearly 70% of the Ebit (earnings before interest and tax).

This is despite the fact that the internet ticket segment contributed just about 30% of revenue, notwithstanding the efforts to diversify the revenue and profit stream. The segment enjoys an Ebit margin of 80%. Also read | IRCTC: The incredible govt move that burned ₹18,000 crore in market cap There are two revenue streams for the segment.

One is convenience fees earned of ₹224 crore (70% of ticketing revenue) in Q1FY25, up by 13% year-on-year in tandem with the growth in number of tickets booked at 118 million. Here, the average realization fee of ₹19 per ticket is likely to be steady as there is no plan to raise the fee per ticket. The other lever to increase absolute fees is through higher volumes or more ticket booking.