If You'd Invested Rs 10,000 in IRCTC Stock at Its IPO, Here's How Much You'd Have Today

Indian Railway Catering and Tourism Corporation (IRCTC) needs no introduction.

The company's ability to be a disruptor in Indian railway technology has turned its fortune over the years.

It has a diversified portfolio of products and services that protect its business from relying on one source of income.

IRCTC's portfolio includes internet ticketing, catering, travel and tourism and packaged drinking water. These businesses continue to remain asset light.

IRCTC also boasts of being one of the largest wealth creators for investors. Since the company debuted in October 2019, the stock price has remained on an upward trajectory.

Let's take a look...

IRCTC vs Sensex

If you had invested Rs 10,000 in IRCTC five years ago during its IPO, your investment would be worth Rs 64,260 today.

This is a whopping 543% return in a little under 5-years.

Benchmark BSE Sensex on the other hand would have given you a return of 112% during the same time period.

As you can see, the company's share price has grown exponentially, giving investors a much better return than the market.

In fact, I vaguely remember investors' faces on listing day. The stock had shot up by more than 100% on the very first day of listing and it looked far from done.

Investors who had applied for the IPO and were allotted shares certainly made a killing.

Better Than its Peers

As of FY24, IRCTC derived roughly 54% revenue from online ticketing and 27% of its revenue from the catering business.

IRCTC has achieved an 80% penetration in E-booking of tickets which is expected to increase.

The company is a true monopoly. Although it doesn't have any direct listed peers it competes with, there are some close competitors that came up when we tried to break down the entire industry.

These include travel booking platforms and other companies like Thomas Cook India, Transcorp International, TBO Tek, Le Travenues Techno, Yatra Online, and Easy Trip Planners.

So how has IRCTC performed against these peers?

In the last five years, the company has stood out with a net profit CAGR of 24%.

Why did IRCTC perform better, you ask?

While IRCTC is traditionally known for its role in railway catering, tourism, and online ticketing, it has increasingly positioned itself as a significant player in the digital infrastructure space.

One of IRCTC's most prominent contributions to digital infrastructure is its online ticketing platform, which has transformed the way millions of Indians book railway tickets.

Beyond ticketing, IRCTC has expanded its digital services portfolio to include e-catering, tourism packages, and even a payment gateway - IRCTC iPay.

This diversification into digital services highlights the company's commitment to leveraging technology to enhance customer experience and streamline operations.

Additionally, IRCTC has also entered into other digital services, such as online hotel bookings and air ticketing.

All these continuous investments in technology is expected to ensure seamless delivery of service.

Robust Financial Profile

IRCTC has seen a sharp jump in online ticketing volumes over the past decade.

Having a monopoly in railway ticketing, the company enjoys reasonable pricing power. The ticketing business, therefore, fetches operating margins as high as 80% compared to barely 10% and 20% margins in the catering and packaged water businesses.

This advantage has trickled down to the company's return ratios. IRCTC's RoCE has jumped from 19% in 2019 to 53.9% in 2024, while the return on equity (RoE) has expanded from 25.5% to 40% as a result.

It has healthy cash flow from operations which supports its growth plans. It is also debt free.

Financial Snapshot

Rs m, standalone	FY20	FY21	FY22	FY23	FY24
Net Sales	22,643	7,767	18,786	35,415	42,702
Growth (%)	21%	-66%	142%	89%	21%
Operating Profit	7,784	2,727	9,494	13,967	16,307
OPM (%)	34%	35%	51%	39%	38%
Net Profit	5,131	1,870	6,596	10,059	11,113
Net Margin (%)	23%	24%	35%	28%	26%
ROE (%)	43.0	13.5	39.7	46.3	38.9
ROCE (%)	62.0	19.2	53.9	63.0	53.1
Dividend (Rs)	2.5	1.0	3.5	5.5	6.5
Debt to Equity (x)	0.0	0.0	0.0	0.0	0.0

Data Source: Ace Equity

Key Challenges

As we mentioned above, IRCTC has diversified into various other businesses to survive in the competitive tourism market.

As it is highly dependent on the performance of the tourism sector right now, any adverse changes in the sector can adversely impact its business, operations, and financials.

Moreover, the company's website is as old as it comes... there are still ways on how it can be fixed because currently, during the most important peak hours of booking tickets, the website is almost guaranteed to get hung up owing to massive traffic.

So it has a lot of ground to cover when it comes to digital infrastructure. Any failure or disruption in the company's digital infrastructure or system failures could adversely impact its business and operations.

To tackle this, IRCTC has state of the art technology that ensures that the integrity and availability of all its online services and its data are adequately secured from prevailing cyber security threats.

Future Prospects

IRCTC recently posted its earnings for Q1FY25. The company's net profit came in at an all-time high of Rs 3.1 billion (bn).

The company is on track to getting the Navratna status. During the quarter, it was upgraded from Schedule B to Schedule A company by the Government of India.

As things stand now, IRCTC continues to invest in capacity expansion, including a new Rail Neer plant in Vijayawada which will be commissioned in October 2024.

The company's management remains optimistic about future growth driven by the government's investment in railway infrastructure worth Rs 2.6 trillion planned for the current year.

IRCTC is also expected to expand services in some segments, including flights and buses.

This is a trend I'm seeing for the past few quarters. Every quarter, the company announces some new thing, which is expected to add up to its topline in the long run.

With a strong deal pipeline for railways, and growing demand, IRCTC is expecting good growth.

To know more about the company, check out IRCTC's detailed financial factsheet.

For a sector overview, read our tourism sector report.

You can also compare IRCTC with its peers:

IRCTC vs Thomas Cook

IRCTC vs Easy Trip Planners

Finally, do check out the below video where we talk about IRCTC - A Rare PSU on the Right Track.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here.