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IRCTC IN reported weak set of numbers with EBITDA miss of 7% led by weak performance from Catering and Rail Neer division. Catering revenue declined 2.2% YoY to Rs5,468mn as 1) base quarter had Rs320mn of business from election special trains and 2) license fee income from static units was low in 1QFY26 given quite a few stations were under upgradation. On the other hand, Rail Neer revenue was down 0.9% YoY to Rs1,105mn as Bilaspur plant was not operational. In addition, election special trains that were ferried in base quarter had a component of bottling business too which was missing this time around. In light of weak performance in 1QFY26, we cut our revenue estimates by ~4% over the next 2 years, however, our EPS estimates are broadly intact as we tweak our deprecation estimates given land forms ~Rs3,665mn of total cost pertaining to the new office building that has been capitalized. We expect revenue/PAT CAGR of 8%/10% over FY25-FY27E and retain BUY on the stock with a TP of Rs850 (44x FY27E EPS; no change in target multiple)

Revenue up 3.8% YoY: Revenues increased 3.8% YoY to Rs11,597mn (PLe Rs12,382mn). Catering revenue declined 2.2% YoY to Rs5,468mn (PLe Rs6,148mn) with an EBIT margin of 13.1% (PLe 12.4%). Internet ticketing revenue increased 9.0% YoY to Rs3,588mn (PLe Rs3,613mn) with an EBIT margin of 84.2% (PLe 82.5%). Rail Neer revenue was down 0.9% YoY to Rs1,105mn (PLe Rs1,215mn) with an EBIT margin of 13.9% (PLe 14.0%). Revenue from Tourism surged by 20.7% YoY to Rs1,477mn (PLe Rs1,407mn) with an EBIT margin of 8.7% (PLe 7.8%).

EBITDA increased 6.0% YoY: EBITDA increased 6.0% YoY to Rs3,973mn (PLe Rs4,274mn) with a margin of 34.3% (PLe of 34.5%) as against 33.5% in 1QFY25. Weak top-line performance led to a miss on EBITDA front. PAT increased by 7.5% YoY to Rs3,307mn (PLe Rs3,383mn) with a margin of 28.5% (PLe 27.3%) as compared to a margin of 27.5% in 1QFY25.

Con-call highlights: 1) ~126mn tickets were booked in 1QFY26. 2) UPI share for 1QFY26 was at 48.7%. 3) Convenience fee/non convenience fee formed 2/3rd/1/3rd to internet ticketing revenue, respectively. 4) Catering reach is ~1,300 trains. 5) For Rail Neer business, capacity expansion is planned at Danapur and Ambernath plants, with additional facilities planned at Prayagraj, Ranchi, Bhagalpur, and Mysore. 6) In Rail Neer business, ~1.41mn bottles were sold per day in 1QFY26. 7) IRCTC IN will add one more rake of Bharat Gaurav train in FY26E. 8) IRCTC IN has received in-principle approval from RBI for payment aggregation license. Final approval is likely to take 12-18 months. 9) Utilization of Rail Neer plants was 87.4% in 1QFY26 (86.8% YoY in 1QFY25). Blended realization per bottle is on a decline as 500 ML bottles are being introduced in Vande Bharat trains. Typically, Rail Neer bottle of one litre is sold for Rs15.

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