IRCTC - Fundamental Analysis of IRCTC Share, IRCTC Business Model, IRCTC Q3 Results | Groww - YouTube

A company's IPO comes out

And the company says that if you want to buy our share, you will have to buy it at Rs 320

And the people who get the IPO, in one day itself that share goes to Rs 670

Which means that if you took that IPO, in the first day itself you would have gotten more than 100% returns

It's listing price was more than 600

But a lot of people wonder whether you should buy it after it is listed

But if you would have bought it at that time at 600 or 700 rupees

Today its share price would have increased to become 1900 rupees

Which means that that company, if you would have bought it after it was listed

Today it would have given you more than 150% returns

Today we are going to talk about that company which is called IRCTC

Which gave the people that invested in its IPO, very good returns

And not only to the people who invested in the IPO

After that if someone would have invested in it

They gave even them very good returns

I, Jagdeep Singh, welcome you to the Groww channel

Today we are going to conduct the fundamental analysis of IRCTC

In which we are going to talk about the business model of IRCTC

Should you still invest in IRCTC or has its price already gone up a lot

First we will talk about the business model of IRCTC

How and where has their business spread out and from where do they get their revenue

But before that I would like you tell you something

That a lot of people have the confusion that IRCTC works in railways in India

This is a railway owned company to an extent

But this doesn't run trains

But the people who travel in railways

They provide different services to them

Now the question comes, what are the different services they provide

And as a customer, what are the services of IRCTC you avail in your lifetime

So if I talk about the business model of IRCTC or talk a little about their revenue break up

Their revenue is mainly spread out in four segments

First, if you want to travel in railways, you have to book tickets

And until now to book tickets, people used to go to the railway station and wait in line to book the tickets

But IRCTC came out and revolutionised it

After IRCTC came out, if you ever have to book a railway ticket ever

If you want to book a ticket, you can go on the IRCTC website or on their application

And book any ticket at any time

IRCTC has simplified this a lot

So the first revenue in their segment comes from their ticketing business

Now you have booked the ticket, after that you travel in the railway

While travelling, you might feel the need to eat which we call the catering business

So IRCTC controls the catering business in Indian railways

Which means that if you eat or drink anything while travelling in railways, then that is provided by IRCTC

Apart from this, one of the most important things you need while travelling is drinking water

And this water is sold with the name Rail neer

So IRCTC's third revenue break up

That comes from Rail neer, which is drinking water

Now I will talk about the fourth revenue break up

So the fourth segment from where they get their revenue is

That is from tourism

Now if I talk about the fourth segment from where they get their revenue

Where they have expanded themselves really well, that is tourism sector

As you know that in tourism you go to different places for which you require trains

Apart from this you have a lot other requirements

So IRCTC also fulfils these requirements

Apart from this IRCTC operates a lot of its own railways such as Tejas Express, Maharaja and other apart from this

Which are mainly operated by IRCTC

After talking about segments, we will talk a little in detail, if I tell you about IRCTCs revenue

Consider that their revenue is Rs 100

From which segment, how much revenue comes out

And before knowing this, it is very important that you have an idea

How they have diversified themselves in these segments

Which means I will take you back to 2017

At the time, from which segment, did they get how much revenue

And today, from which segment do they get how much revenue

As you can see on the screen, I have shown you in three pie charts that the revenue of IRCTC

Out of their four segments

How it varies from 2017 to 2019

So if I talk about the financial year 2017

At that time their main revenue used to come from 3 sectors

Like tourism sector

Internet ticketing sector and catering sector

So at that time there wasn't much different, it was 34, 40 and 25%

10% of their revenue at that time used to come from drinking water

Which changed and if I talk about the financial year 2019

So their main revenue now

55% of it comes from their catering business

So if we understand the business of IRCTC

They understood that they have to expand themselves well in the catering business

So that they can earn good profit there

Because of which the share of their revenue increased from 25% and reached 55% from their catering business

Apart from this the revenue break up that decreased

That was in the internet ticketing sector

Which reduced from 30% and has now become 12%

So the revenue break up I spoke about was from the financial year 2017 to 2019

But the retail investors who think of investing

It is very important for them to read the result of the recent quarter

Let us talk about the recent quarterly result

How their segment wise revenue was there

And from the financial year 2019, how it varies

As you can see on my screen, this is the revenue break up of this quarter, which is of December 2019

In this quarter from which segment do they get how much revenue

As you can see, their major revenue of 37.5%

That comes from the catering business

After this, 8.5% from Rail neer

And after this, a big jump of revenue for them, percentage wise

That was in the internet ticketing business

Where, before their revenue percentage was 12%

Which has now increased to become 31.6%

Apart from this if I talk about their tourism sector, from there their revenue comes out to be

Around 23%

So what I spoke about now was about their revenue

Their total revenue in this quarter was 715 crores

In this, I told you about the break up, and what does a major chunk of their revenue come from

But now it is very important for any company

How much profit they earned from their revenue

If I talk about IRCTCs profit, their profit out of 715 crores

Their profit comes out to be 270 crores

And if I tell you a very interesting thing

Their overall profit of 270 crores

The major chunk of that which is 193 crores come from the internet ticketing business

So if we talk about IRCTCs business

Their main profit generating business is their ticketing business

Now we would want to know why they expanded themselves in the ticketing business so well

So as you know, a lot of people in India

They use trains a lot

And until now a lot of people used to wait in line to buy tickets

When the penetration of internet happened in India, then the common people of India

They started preferring IRCTC to book their tickets

Because of which the tickets that were booked through IRCTC

There was a good jump in that

And it is possible that in the coming time, when the penetration of internet happens more

Maybe, this core business of IRCTC

From there, their chances of the revenue increasing can becomes better

Apart from this, if I tell you another interesting thing

IRCTC has started to penetrate in the flight ticket booking business as well

So now if you want to book a flight ticket, you go to any online travel aggregator and book your flight ticket

There are many websites for it

But they charge you a convenience fee which is between 250-300

So here IRCTC has started to differentiate themselves

They have kept the convenience fee very low

Because of which it becomes very simple for the common man

Apart from simple, it becomes very easy for them to book tickets through IRCTC

So only time will tell how well they can expand themselves in the travel ticket business

Let us talk about two very important financial parameters

Which become very important for any company

And those financial parameters are Revenue and Profit

If I talk about how IRCTCs revenue has increased from the financial year '18 to '19

Their revenue increased by 26%

From 2018 to 2019

Now I will talk about how their profit increased

Their profit increased by 40%

Which means that whenever IRCTCs revenue increases by any percentage

Their profit increased by a higher percentage

So it is very important that we analyse that their result that came in December

How their revenue increased then

And compared to their revenue, how their net profit increased

So if I talk about financial result of Q3 of 2020

Their revenue that increased as compared to the same quarter of the last financial year

Their revenue increased by more than 65%

So there if I talk about net profit

So IRCTCs net profit

Which increased in the quarter 3 of financial year 2020

As compared to financial year 2019

That has increased by 140%

Which means that a company whose revenue increases just by 60%

Its net profit increases by 140%

So here they have streamlined their operations very well

And optimised it very well

Because of which their bottom line has come out very well in the recent quarter

Apart from this, I will tell you another interesting thing about IRCTC

That whenever you book a ticket through IRCTC

Many times you pay for it using different credit cards

And many times it happens that these platforms keep a partnership with credit card companies

Because of which even IRCTC have made a partnership

That is with SBI cards

Yes, this is the same SBI cards whose IPO is going to come out in the coming time

So if you want to watch the video in which we talk about SBI cards, there is a link in the description for it

So whenever an individual goes to the IRCTC website and uses an SBI card to book a ticket the income they get from that

A small share of that goes to IRCTC as well

So if I talk about this partnership, their revenue from this in the past year

Has had an increment of 258%

Which means that they made really good profits from this partnership in the past financial year

After this let us talk about EPS

Which stands for Earning Per Share

Which tells us that if any company made an earning of Rs 100

And if it has 10 shares, then the earning per share is Rs 10

Which is the earning that the company makes on one share

So if I talk about the EPS of IRCTC

A year ago, their EPS was around 4.6

So if I talk about the past year, their EPS increased from 4.6 and became more than 12.5

Which means that in the past year there was a big increment in their EPS

So if the topic of EPS has come out, let us talk about P/E ratio

Price to earning ratio

Which tells us that if the company's price is Rs 100

Against that, how is the company's earning

And normally it is considered that lower the P/E ratio, the better

So if I talk about IRCTCs P/E ratio, then that is around 50

So like I always tell you that if you ever want to looks at someone's P/E ratio

You should compare it to other companies in that industry and see if it is more or less

As you know there aren't many companies in IRCTCs competition

It is possible that some companies can come if railways get privatised

But until that doesn't happen, you can make a comparison to Nifty

So Nifty's P/E ratio is 30+ so in comparison to that, IRCTCs P/E ratio is slightly higher

But I always tell you, you cannot judge an investment based on P/E ratio

This is just a parameter, which you can use as a fact check to see how it can perform in the coming time

So this video we made was a fundamental analysis

Now the question comes whether you should invest here or not

So how do you decide investment?

The data I told you was about the past, but you invest for the future

So for the future it is very important that the company you're going to invest in

And the industry that it operates in, how will it go further in the coming time

So if I talk about IRCTC, like I have told you many times

Mainly operates in four businesses

So if you want to see its potential in the coming time

It is very important for you to see how the tourism sector will grow in the coming time

How the CAGR of drinking water will be in the coming time

The railway ticketing business

How will the CAGR be there in the coming time

So if you start taking a view from there, that that industry

How will that grow

You will get an idea how that company will grow in the coming time

If I tell you some data

The expectancy of the CAGR of the tourism sector in the coming time

That is around 10%

If I talk about the drinking water sector

It is expected that the CAGR there

That will be more than 20%

So these are small data, using which you can get a holistic view

You can get an idea using that, how a company can perform in the coming time

If you liked this video, press the like button, comment and answer our question

Do you think we should still invest in IRCTC or not

You can give a reason for your answer as well

Because from your answer, we and our investor community get to learn a lot

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