IRCTC’s sharp underperformance versus Nifty PSE index still hasn’t made valuations cheap enough

₹520.05 on Thursday, having lost 23% of its value in the past year.This performance contrasts sharply with the Nifty PSE index, of which IRCTC is a part, which has gained 19% during the same period.

In other words, the stock has underperformed the index by 43 percentage points.While the one-year performance is disappointing, a more worrying development for investors is that the stock breached its nearly three-year low of ₹557 earlier this month, a level last seen on 29 March 2023.The key question now is whether the sharp underperformance has made the stock cheap relative to its earnings growth.Based on PL Capital’s FY28 earnings estimates, the stock trades at a price-to-earnings (P/E) multiple of 25x, significantly lower than its historical median P/E of around 45x.However, the brokerage expects single-digit earnings growth of 9% and 8% for FY27 and FY28, respectively—hardly exciting for investors.This results in a PEG ratio (P/E divided by growth) of nearly 3x, which still appears expensive given that the preferred range is typically between 1x and 2x.The potential for upside surprises to FY27 and FY28 earnings estimates appears limited, given the company’s lacklustre performance in the nine months ended December (9MFY26).Since IRCTC generates a sizeable portion of its profits from other income, analysts consider operating Ebit (excluding other income) a better gauge of underlying profitability.On this basis, Ebit rose 10.2% year-on-year to ₹1,278 crore in 9MFY26.The internet ticketing segment contributed 75% of total Ebit during this period.Investors had been hoping that non-ticketing segments—catering, tourism and Rail Neer—would drive additional growth, but that expectation has not yet materialized.The catering