IRCTC Limited

Started in 1999, state-owned Indian Railway Catering and Tourism Corporation Limited (IRCTC) is a wholly-owned subsidiary of Indian Railways. IRCTC handles tourism, catering, online ticket booking services and provides packaged drinking water in trains and at railway stations in the country. The company was conferred as a Mini-Ratna or Category-I Public Sector Enterprise by the Indian Government in 2008. In the last three months ended on 30th June, nearly 15 to 18 million transactions were placed per month through the IRCTC website. IRCTC also provides non-railway services including budget hotels, e-catering and executive lounges to create a one-stop solution for customers. Currently, the company operates majorly in four segments which are:1. Travel and TourismIRCTC is specialised in rail tourism. It offers travel and tourism services across diversified segments such as air, land, rail, & cruise tour packages, hotel bookings and air ticket bookings.2. Packaged Drinking WaterIt is an authorised manufacturer and distributor of packaged drinking water on trains and at railway stations. The company manufactures packaged drinking water under brand name Rail Neer. Company has ten operational Rail Neer plants located at Delhi, Patna, Palur, Ambernath, Amethi, Parassala Bilaspur, Hapur, Ahmedabad and Bhopal, out of which Rail Neer Plants at Amethi, Parassala, Hapur, Ahmedabad, and Bhopal are under Public Private Partnership ('PPP') mode.3. Catering ServicesThe company provides food catering services including on-board catering (through mobile) on trains and static catering services at stations.4. Internet TicketingIRCTC has a mobile app and a dedicated website to offer online railway ticket booking facility. As of August 31, 2019, company had 1,384 full time employees across the business verticals including more than 350 graduates from the Institute of hotel managements and Food Craft Institutes with expertise in hospitality industry. In addition, they have more than 60 employees who are on deputation from various ministries of Government of India and approximately 240 employees on contract basis. As per financial performance, IRCTC has posted total income/net profits of Rs. 1602.85 cr. / Rs. 229.08 cr. (FY17), Rs. 1569.56 cr. / Rs. 220.62 cr. (FY18) and Rs. 1956.66 cr. / Rs. 272.60 cr. (FY19). So company has posted consistent growth over last couple of years. IRCTC has posted an average EPS of Rs. 15.50 and average RoNW of 25.63% for last three fiscals. Issue is priced at a P/BV of 4.9 as per NAV of 65.18 on 31.03.19. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 18.78. So issue looks very fully priced. On BRLM's front, three merchant bankers associated with this issue and have handled 39 public issues in the past three years. From recent 10 IPOs, 6 were opened below issue price on listing date. As of now, from last 10 IPOs, 3 are trading below issue price and remaining above issue price. (25.09.19) As per financials, company's has shown consistent growth, RoNW is 26.14% for last three fiscals and issue is priced at P/E of around 18.78 as per latest earnings. Company is in business of catering and tourism for railways. As Government is focused on improving services in Railway and increasing traffic, so IRCTC is expected to grow at good rate for next couple of years. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.

• 1 The President of India acting through the Ministry of Railways