IRCTC Q1 profit rises 7.4% to ₹331cr, revenue up 12%
What's the story
Indian Railway Catering and Tourism Corporation (IRCTC) has reported a year-on-year rise in its consolidated net profit for the June quarter. The company's net profit stood at ₹331 crore, up from ₹308 crore in the same period last year, reflecting a 7.4% increase. This growth was primarily driven by strong revenue performance across key segments such as catering, Railneer (packaged drinking water), internet ticketing, and tourism.
Financial performance
Revenue, operating profit, and margins show positive growth
IRCTC's revenue for the June quarter grew 11.8% year-on-year to ₹1,159.6 crore from ₹1,117.5 crore last year. The company's operating profit (EBITDA) also witnessed a growth of 5.8%, rising to ₹396 crore from ₹375 crore in the same period last year. This was reflected in an improvement in margins as well, which increased to 34.2% from 33.5% YoY.
Market response
Legal issues persist despite strong operational performance
Following the announcement of its financial results, IRCTC's shares showed an increase, closing at ₹728.9 on the NSE, up 1.16%. However, despite this strong operational performance, the company is still facing a number of legal and taxation-related issues. A major concern is the dispute over increased license fees for catering services on trains, which is currently being heard in court with no financial impact recorded in its accounts yet.
Tax challenges
GST reimbursement dispute continues to affect operations
IRCTC is also embroiled in a dispute over Goods and Services Tax (GST) reimbursements to Developer-cum-Operators (DCOs) of Railneer plants, due to discrepancies in Input Tax Credit (ITC) data. Several DCOs have challenged IRCTC's claims. The National Anti-Profiteering Authority (NAA) had issued a notice for alleged profiteering on Railneer sales, which is now being examined by the Competition Commission of India (CCI).
Legal battles
IRCTC optimistic about long-term growth prospects
IRCTC is also contesting an arbitration award in favor of certain licensees regarding claims for welcome drinks and differential costs of regular meals. An appeal has been filed in the Supreme Court. Despite these challenges, the Board of Directors remains confident about the company's long-term growth prospects, emphasizing its commitment to navigating regulatory hurdles while maintaining a strong market position and delivering value to shareholders.