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Deepening the Digital Moat - From Ticketing Utility to Integrated Mobility Platform

IRCTC continues to strengthen its digital moat by leveraging its exclusive position in online railway ticketing and evolving into a broader mobility platform. E-ticketing penetration reached ~89% of reserved bookings in FY26, indicating a strong digital adoption. The company benefits from a large user base, providing multiple opportunities for monetisation through convenience fees, payments, advertising and cross-selling of travel services. The ongoing premiumisation of passenger travel, driven by a rising AC mix (~51%) and increasing adoption of Vande Bharat trains, further enhances revenue potential through higher convenience fee realisation. In addition, IRCTC’s proposed unified travel platform is expected to integrate rail, air, hotel, bus and tourism services into a single ecosystem, improving customer engagement and retention.

Scalable Hospitality & Thematic Tourism - Asset-light Growth with Structural Demand Tailwinds

IRCTC’s own catering operations follows a licensing-based model while its E-catering model enables passengers to connect with authorised restaurants across railway stations, allowing IRCTC to benefit from an asset-light and scalable business model which improves margin expansion as order volumes grow. Bharat Gaurav (~40%) is the major contributor to the Tourism segment revenue. Importantly, this business benefits from strong policy support from the government, given the broader push towards cultural tourism, rail connectivity and domestic travel promotion. IRCTC is also steadily expanding the production capacity of Rail Neer with the objective of meeting a larger share of the packaged drinking water demand. IRCTC’s current daily actual production supply stands at around 1.55 Mn bottles/day, which the company plans to increase to ~2 Mn bottles/day in the long term

Scalable Asset-light Platform Supporting Gradual Margin Expansion

IRCTC is increasingly evolving into a scalable, asset-light digital platform with multiple growth and margin expansion levers beyond its core ticketing business. The company’s recent Navratna status enhances execution agility and capital allocation flexibility, where IRCTC can undertake investments of up to INR 10 Bn or 15% of its net worth. The proposed Payment aggregator license could unlock a meaningful fintech opportunity as it would open up a potential transaction opportunity of INR 700 Bn and enable broader payment processing services across government and PSU ecosystems. Thus, we believe IRCTC’s new initiatives, including the travel platform, expansion of the payment’s ecosystem and improving unit economics in the Catering & Tourism segment, are expected to drive margin expansion over the medium-term.

Investment View:

IRCTC has a monopoly in online reserved railway bookings, with ~89% of reserved tickets booked through its platform. With near-term saturation in Internet Ticketing, the company is increasingly focusing on scaling other high-growth businesses. Rising AC mix (~51%) and adoption of Vande Bharat trains should support higher convenience fee realisation. We expect EBITDA margin to decline to 29.0% in FY27E due to an evolving business mix, before recovering as new initiatives scale and Catering unit economics improve. We forecast Revenue/EBITDA/PAT CAGR of 13.2%/11.3%/10.8% over FY26–FY29E. We believe IRCTC warrants a premium multiple given its high-margin, monopoly-driven business model, strong cash generation, and structural growth visibility from its diversified railway ecosystem. We value IRCTC at 25x average of FY28E & FY29E EPS, arriving at a Target Price of INR 560, implying 20.9% upside from the current level. Thus, we initiate coverage on IRCTC with a ‘BUY’ recommendation and Target Price of INR 560.

Optionality:

The launch of unified travel portal, final approval of the payment aggregator license.

Key risks:

Government regulations, deepening UPI penetration, execution risk in new initiatives, and Rail Neer capacity constraints & operational risks.

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