I R C T C Q1 FY27 earnings call

IRCTC reported a resilient Q1 FY27 with revenue from operations increasing by 18.10% year-on-year to INR1,370 crores, up from INR1,160 crores in the corresponding quarter of the previous year. Profit After Tax (PAT) stood at INR330 crores. Despite this, EBITDA registered a year-on-year decline of 2.77% to INR386 crores, with an EBITDA margin of 28.17%, primarily due to changes in revenue mix and increased costs.

The Catering segment achieved robust growth, with revenue reaching INR732 crores, a 33.82% year-on-year increase. Internet Ticketing revenue stood at INR361 crores, growing by 0.5%, and maintained an impressive EBITDA margin in excess of 80%. Rail Neer generated INR109 crores, a 2.83% year-on-year growth, with a margin of about 10%. Tourism delivered a positive performance with revenue of INR168 crores, marking a 13.5% year-on-year increase, and its EBITDA margins improved to 11.31% from 8.78%.

IRCTC is focused on enhancing operational efficiency and customer experience through digital capabilities. The company is undertaking a Next Generation e-Ticketing (NGET) Infra Refresh, with INR150 crores already infused, aiming to increase ticket processing capacity from 37,000 to over 1 lakh tickets per minute. The beta version of the transformed UI/UX website was launched on July 15th, with a full version expected soon. The iPay payment aggregator license application is awaiting RBI response this financial year, which could expand IRCTC's payment services.

Rail Neer currently has an installed capacity of 17.77 lakh bottles per day, with a supply of around 15.5 lakh bottles per day against a higher demand. To address this gap and combat unauthorized vendors, IRCTC is augmenting existing plant capacities: Ambernath from 2 lakh to 3 lakh bottles and Danapur from 1 lakh to 2 lakh bottles, expected to be finalized this year. New plants are also planned for Prayagraj, Mysore, Ranchi, and Bhagalpur, with operational timelines extending beyond FY26-27.

Catering margins declined to 9.29% in Q1 FY27 from 10.42% in FY25-26. This was attributed to higher sales in train catering, pilot initiatives, additional HR costs of INR20 crores, and a INR4 crore impact from a 'proof of concept' experiment in six trains. Management expects these one-time^📎 impacts to subside in subsequent quarters, aiming to restore margins to the traditional 10-12% range. The company is also exploring bringing in branded players and improving kitchen infrastructure to enhance quality.

IRCTC is actively promoting Non-Fare Revenue (NFR) opportunities, including vinyl wrapping of coaches and train naming rights. The Tejas Express, for instance, is being rebranded as 'Sprite Tejas Express,' marking a new initiative. This strategy aims to leverage existing assets for additional revenue streams, complementing the fair revenue and catering license fees.

While internet ticketing revenue grew marginally by 0.5% to INR361 crores, the non-convenience fee component declined from INR123 crores to INR113 crores. This decline was linked to the temporary removal of marketing and ad revenue during the website transformation, restrictions on agent businesses, and the impact on iPay. Management aims to recover non-convenience fee revenue to INR150 crores. Analysts also raised concerns about the convenience fee not increasing with inflation, especially with UPI transactions, which management acknowledged as an area to address.