Shares of Indian Railway Catering and Tourism Corporation (IRCTC) fell on Tuesday opening by nearly 3% to Rs 792.45 on the Bombay Stock Exchange (BSE), despite the company reporting a modest 4% year-on-year rise in net profit for the second quarter on Monday.
To be sure, the company’s net profit for the quarter ended September 2024 stood at Rs 308 crore, up from Rs 295 crore in the same quarter a year before. On the other hand, the state-run railway services provider saw its revenue from operations increase by 7.2% to Rs 1,063.99 crore from Rs 992.40 crore during the same period a year ago.
Revenue Growth Led by Core Segments
IRCTC’s revenue from operations increased by 7.2% to Rs 1,063.99 crore, compared to Rs 992.40 crore during the same period a year ago. The growth was largely fueled by its Catering and Internet Ticketing segments.
On the other hand, the company’s catering revenue climbed 11.68% to Rs 481.95 crore, up from Rs 431.52 crore a year prior while earnings from Internet Ticketing surged by 13.36% to Rs 370.95 crore, compared to Rs 327.50 crore in the same quarter of FY23.
However, Tourism remained a weak spot, with revenue down 27.35% year-on-year, dropping to Rs 124.44 crore from Rs 158.48 crore in Q2 FY23.
Rising Expenses Impact Margins
IRCTC’s expenses increased significantly in the quarter as they rose by 9.79% to Rs 644.26 crore in Q2 FY24, compared to Rs 707.38 crore last year. The increase in operating costs, along with a marginally lower profit margin, has raised concerns about the company’s ability to maintain growth amid rising operational expenses. Additionally, IRCTC’s EBITDA (earnings before interest, taxes, depreciation, and amortization) margins saw a minor dip.
Dividend Announcement
IRCTC has announced an interim dividend of Rs 4 per share for FY25. Shareholders eligible for the dividend will be determined on November 14, the record date.
