The state-owned travel support services company, Indian Railway Catering & Tourism Corporation (IRCTC), posted its September quarter results on Monday, 1 November 2021.
The company's total revenues stood at ₹421 crore, registering a sharp 287% year-on-year growth. IRCTC’s net profit stood at ₹158 crore compared to ₹32 crore reported in the same quarter last year, growing by a massive 386% year-on-year
IRCTC has 4 business segments: Catering, Rail Neer, Internet ticketing and Tourism.
With easing restrictions, revenues from the internet ticketing segment grew 356% to ₹265 crore. The internet ticketing segment contributes 65% of the revenues.
Recently, IRCTC’s stock saw high volatility due to announcements relating to sharing of revenues earned from the convenience fee between IRCTC and the Ministry of Railways.
Just to give you a perspective, historically the revenue-sharing arrangement was as follows:
Table 1: Revenue-sharing arrangement
| Year | IRCTC | Ministry of Railways |
| Prior to 2014 | 100% | 0% |
| 2014 | 80% | 20% |
| 2015 | 50% | 50% |
| 2016 | 100% | 0% |
Source: FY21 Annual Report
On 28 October 2021, IRCTC announced that with effect from 1 November 2021 the sharing arrangement would be revised and set to 50:50. In FY21, the company had earned a revenue of ₹299 crore from convenience fees. Further, the FY21 profit was about ₹190 crore. Sharing 50% of the revenues from convenience fee would have impacted profits to a large extent.
The news resulted in a sell-off in IRCTC’s stock during the start of the trading session. Its stock fell by 30% in the initial trade. However, the government quickly clarified and waived off the revenue-sharing arrangement. The revision in the arrangement was announced during market hours and the stock bounced back as the concerns faded away.
In the current financial year, the IRCTC share price has risen by nearly 143%. The Nifty50 index has also risen by almost 22%, which shows that the stock has significantly outperformed the Nifty50.
References
Financials
https://www.bseindia.com/xml-data/corpfiling/AttachLive/2383c201-a5b1-472e-9ea5-ed3709d53af8.pdf
Revenue-sharing news https://www.bseindia.com/xml-data/corpfiling/AttachHis/547a294c-3854-4d4c-8928-d62b328cdd35.pdf
Revenue-sharing withdrawal https://www.bseindia.com/xml-data/corpfiling/AttachHis/3c3ead91-bfc4-421d-8f7e-66a403197999.pdf
Convenience fee history
https://www.irctc.com/assets/images/Annual%20Report%202020-21%20(English).pdf