INDIAN RAILWAY CATERING AND TOURISM CORP. LIMITED [IR]

• The Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) is a central public sector enterprise wholly owned by the Government of India and falls under the administrative control of the Ministry of Railways. It holds exclusive authorization from Indian Railways to deliver catering services, online railway tickets, and packaged drinking water at railway stations and on trains throughout India. Established with the goal of upgrading, modernizing, and professionalizing catering and hospitality services, IRCTC also manages hospitality services at railway stations, on trains, and other locations, promoting international and domestic tourism in India through public-private participation. The company's business encompasses four main segments: Internet ticketing, Catering and hospitality, Tourism & Train operations, and Packaged drinking water (Rail Neer). IRCTC has diversified into additional ventures such as e-catering, executive lounges, and budget hotels, aligning with its objective to become a comprehensive 'one-stop solution' for its customers. As of March 31, 2023, the company has a presence in 474 trains with pantry cars and 713 trains under Train Side Vending (TSV). In the Rail Neer segment, it boasts a production capacity of 15.52 lakh bottles per day as of March 31, 2023.
• INTERNET TICKETING: IRCTC facilitates e-ticket booking for railways through mobile applications, websites, and agents. Additionally, it offers ticket booking services for airways and buses.
• CATERING: IRCTC provides mobile catering services on premium train services like Rajdhani, Shatabdi, Duronto, Gatiman, Tejas, and Vande Bharat, among others. The company also engages in static catering through food plazas, fast food units, and cell & base kitchens. Furthermore, its e-catering service delivers food directly to passengers on demand through a mobile application and food partners.
• TOURISM AND TRAIN OPERATIONS: The company offers tour packages, special trains for specific destinations, and luxury tourist trains such as the 'Maharajas' Express and Golden Chariot. IRCTC is involved in accommodation services, outbound packages, corporate business travel, and state teerath.
• PACKAGED DRINKING WATER: IRCTC manufactures and provides Rail Neer, a packaged drinking water brand, to travelers.

MANAGEMENT:

The management's mission is to enhance customer services through railway catering, hospitality, travel & tourism, employing best industry practices. The aim is to establish leadership by providing value-added products & services for passengers, tourists, and other customers.

SHAREHOLDING PATTERN: As of Q3 FY24, the promoter (President of India) holding stands at 62.40%. Foreign Institutional Investors (FIIs) increased their stake from 7.11% in Q2 FY24 to 7.34% in Q3 FY24. Domestic Institutional Investors (DIIs) increased their stake from 10.52% in Q2 FY24 to 11.98% in Q3 FY24. The top public shareholding is held by Life Insurance Corporation of India at 8.97%.

FINANCIALS:

• SALES GROWTH: Over a 5-year CAGR period, IRCTC experienced a growth rate of 19.3%. In FY23, the company reported sales of ₹3,541 crore, a significant increase from ₹1,879 crore in FY22. The revival in business segments, especially catering and tourism, drove this growth. Sales grew consistently from ₹1,523 crore in FY17 to ₹2,264 crore in FY20, primarily due to robust performance in the catering segment. The removal of convenience fees from Nov 23, 2016, to Aug 31, 2019, impacted internet ticketing revenue in FY18 and FY19. In H1 FY24, sales grew by 20% YoY to ₹1,997 crore, led by growth in catering, tourism, and state teereth segments. Catering business growth was supported by an increase in the number of catering trains, with services provided in 1,284 trains as of Sept 30, 2023.
• EBITDA GROWTH: The EBITDA witnessed a 5-year CAGR of 34.9%. In FY23, EBITDA increased to ₹1,276 crore from ₹881 crore in FY22, driven by topline growth. Operating profit growth was recorded across all segments during the year. EBITDA grew from ₹297 crore in FY17 to ₹698 crore in FY20, mainly due to operating profit growth in the ticketing and catering segment. In H1 FY24, EBITDA grew by 13% YoY to ₹710 crore. The catering, rail neer, and state health segments reported strong operating profit growth during this period. The tourism business segment reported an operating loss due to an exceptional item of ₹51.9 crore related to the provisioning of revised haulage charges for the Tejas trains in previous years.
• PAT GROWTH: Over a 5-year CAGR period, PAT recorded a growth rate of 35.5%. In FY23, PAT stood at ₹1,006 crore, an increase from ₹664 crore in FY22. PAT grew from ₹215 crore in FY17 to ₹513 crore in FY20, supported by an increase in EBITDA, lower depreciation costs due to the asset-light business model, and a decline in the effective tax rate in FY20. In H1 FY24, PAT grew by 12% YoY to ₹527 crore. During this period, the company reported an exceptional loss of ₹51.9 crores related to the provisioning of revised haulage charges for the Tejas trains in previous years. The PAT, excluding the exceptional item, stood at ₹579 crore in H1 FY24, compared to ₹472 crore in H1 FY23, representing a 23% YoY growth.
• CASH FLOWS: In FY23, cash from operations (CFO) amounted to ₹810 crore, driven by increased net profit. Expenditure towards PP&E, capital advances, and a decrease in other bank balances resulted in a net outflow of ₹315 crore in FY23. The payment of lease liability and dividends in FY23 led to a net cash outflow of ₹434 crore.

SECTOR: In 2020, the travel & tourism industry's contribution to the GDP was $121.9 billion, expected to reach $512 billion by 2028. In India, the industry's direct contribution to the GDP is projected to grow at an annual rate of 10.35% between 2019 and 2028. According to the World Travel and Tourism Council, travel and tourism in India are expected to grow by 7.4% in 2022, with an increase in leisure travel post-Covid. Various factors, including extensive promotion of tourism, and upgradation.

Concall Notes - November 2023 Financials: