Indian Railways Dividend: PL Recommends To Hold Miniratna IRCTC Shares For TP Of Rs 700

Indian Railways catering services provider, IRCTC has declared dividends along with its financial results for the September quarter of FY24. IRCTC will pay an interim dividend to the tune of 125% amounting to Rs 160 crore. The company has also fixed the record date to determine eligible shareholders for the dividend benefits. The earnings were broadly in line and Prabhudas Lilladher recommends holding for a target price of Rs 700.

As per the regulatory filing, IRCTC declared an interim dividend of Rs 2.50 per share on a face value of Rs 2 each for FY24. In percentage terms, the dividend payout will be 125% and in value terms will be to the tune of Rs 160 crore.

IRCTC fixed Friday, November 17, 2023, as the record date for payment of Interim Dividend of the FY 2023-24.

The 24-year-old Miniratna has reported a net profit of Rs 294.67 crores in the September Quarter of FY 2023-24 marking an increase of 30.36% from Rs 226.03 crores in Q2 of FY 2022-23. The net profit registered is the highest-ever profit registered by IRCTC in the history of IRCTC for this Quarter.

Also, in the quarter, the PSU registered a strong financial performance with an increase in total revenue of 23.51% which stood at Rs 995.31 crores in the September Quarter of FY 2023-24 in comparison to Rs 805.80 crores in Q2 of FY 2022-23. Both EBITDA and PAT ended up at healthy margins of 28.54% and 30.36% respectively.

RCTC has always prioritized open communication and disclosure to our stakeholders. This UFR demonstrates our dedication to providing investors, clients, and partners with a clear understanding of our financial health and our strategic direction.

The company was conceived as an extended arm of the Indian Railways to upgrade, professionalize, and manage catering and hospitality services at stations, on trains, and other locations. Additionally, it has been instrumental in promoting both domestic and international tourism.

On BSE, IRCTC shares ended at Rs 676.90 apiece, down by 0.76% with a market cap of Rs 54,152 crore.

In a note, Jinesh Joshi - Research Analyst, Prabhudas Lilladher said, "Revenues increased 23.5% YoY to Rs9,953mn (PLe of Rs10,611mn). Revenues from State Teertha /Catering/Rail Neer/Tourism/Internet Ticketing was up 118.9% YoY/ 29.0% YoY/ 3.8% YoY/ 39.0% YoY/ 9.1% YoY to Rs648mn (PLe Rs444mn)/Rs4,315mn (PLe Rs4,849mn)/Rs780mn (PLe Rs902mn)/Rs966mn (PLe Rs1,250mn)/ Rs3,275mn (PLe Rs3,166mn) respectively. All the segments were EBIT positive except for tourism."

Adding, Joshi highlighted that EBITDA increased 20.2% YoY to Rs3,666mn (PLe Rs3,610mn) with a margin of 36.8% (PLe of 34.0%) as against 37.8%/34.2% in 2QFY23/1QFY24 respectively. Adjusted PAT stood at Rs2,947mn (PLe of Rs2,847mn) up by 30.4% YoY and with a margin of 29.6% (PLe 26.8%) as against 28.1%/28.4% in 2QFY23/1QFY24 respectively.

Joshi added that IRCTC stock currently trades at 45.6x our FY24E EPS estimate of Rs14.7. He recommended holding IRCTC shares for a target price of Rs 700.