IRCTC — earnings call

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Prepared remarks

Moderator · Conference Operator

Ladies and gentlemen, good day and welcome to the IRCTC Limited Q2 FY 24 Earnings Conference Call hosted by Dolal Capital.

As a reminder, all participant lines will be in the listen – only mode and there will be an opportunity for you to ask questions after the presentation conclude.

Should you need assistance during this conference call, please signal an operator by pressing * and then 0 on your touch tone phone.

Please note that this call is being recorded.

I now hand the conference over to Mr. Rahul Jain from Dolat Capital .Thank you and over to you, sir.

Rahul Jain Thank you.

Good afternoon, everyone.

On behalf of Dolat Capital, we welcome you all to the Q2 FY24 conference call of IRCTC Limited.

I take this opportunity to welcome the management of IRCTC represented by Ms. Seema Kumar, who is CMD of the company; and Mr. Ajit Kumar ji, who is Director Finance, and CFO of the company.

And we also have Dr. Lokiah Ravi kumar , who is Director of Catering ; and Mr. K.K.Mishra ji , who is Director for Tourism and Marketing segment.

And now I would like to hand conference over to IRCTC management to take the proceeding forward.

Over to you please.

Seema Kumar Good afternoon, everyone.

I'm Seema Kumar, CMD here.

At the beginning, I would like to extend a very warm welcome to all the participants for the con call of IRCTC Limited for the quarter ending 30th September 2023.

Yesterday, the company had announced the unaudited financial results for the Q2 FY24 and then same has been advised to both the stock exchanges as well.Now, I will give a brief overview of Q2 FY24 followed by the Director of Finance and CFO, who will give the details of performance of various business segments, following which, we shall have the question-and-answer session.

In Q2 FY24, the company has reported revenue just under INR 1,000 crores mark as INR 995.3 crores, which is a growth of 23.5% YoY and almost at par on QoQ basis.

The largest segment Catering as well as Tourism have been the main driver of the YoY revenue along in this year.I'm very happy to report that almost all the segments have reported an improvement in EBIT margin both on YoY as well as QoQ basis.Absolute EBITDA has also hit a new high at INR 366.6 [ph] crores, [Inaudible 00:02:53].The company reported a net profit of INR294.67 [ph] crores in September quarter of FY24, making an increase of 30.36% from INR226.3 crores in Q2 FY23. Net profit is the highest ever profit registered by the company in the history of IRCTC in this quarter.

The Board of Directors of the company has declared an interim dividend of INR 2.5 equity share for a face value of INR 2 per share for FY24 which is 125% of paid-up share capital which stands at INR 160 crore.

At that consolidated level, EBITDA margin stands at 36.8% vis-à-vis 37.8% YoY and 34.2% QoQ basis.

Here, I would like to conclude my opening remarks by wishing you and your dear ones are very IRCTC Limited 08.11.2023

Thank you.

Next question is from the line of Sidharth Agrawal from Systematic.

Please go ahead.

Sidharth Agrawal I've been follower of IRCTC since a long time.

Ma’am just two questions, actually maybe just one question.

Some other online ticketing platforms like MakeMyTrip and EaseMyTrip, they are offering products like free cancellation and trip guarantee offers with train ticket booking.

So, what I wanted to know is, IRCTC also planning to launch a similar feature to retain ticketing user?

And if yes, then when, and any estimate of the annual revenue potentials on the same or when can we start seeing revenues on such product?

IRCTC Limited 08.11.2023

Thank you.

Next question is from the line of Rohan Nagpal from Helios Capital Asset Management.

Please go ahead.

Rohan Nagpal So, you told us that INR 221 crores is convenience fee revenue for the quarter.

Could you provide a break-up of the remaining INR 100-odd crores that is booked under Internet Ticketing or what fraction of that is say advertising or iPay revenue, et cetera?

Seema Kumar Yes, definitely.

As I said, the convenience fee stands at INR 221 crores, then agent business is INR 44 crores, then payment gateway business is INR 17 crores, then loyalty program is INR 12.39 crores, marketing and advertising et cetera is INR 7.29 crores, iPay is INR 19.58 crores, and then digital marketing et cetera is INR 1.16 crores.

All stuffed together makes it INR 323.46 crores.

IRCTC Limited 08.11.2023

Thank you.

Next questions from the line of Rohit Jain from Tara Capital.

Please go ahead.

Rohit Jain Good evening.

So, just a question again on catering.

The license renegotiation that was due, has it been completed, let's say, for all the trains in which there's pre-book meals, like Shatabdi, Rajdhani, et cetera?

Seema Kumar Yes, the exercise is complete.

I suppose you are hinting towards the revision of the license fee which was to be done as per the year 2019.

That has been done.

We have raised the bills.

There are few court cases also have been registered, we are in the process of realizing it.

Rohit Jain So, I mean, what I'm trying to understand is, that since it was supposed to be done on a retrospective basis, are we going to, let's say, get any one-time benefits going ahead or all these benefits have already been accounted for?

Seema Kumar No. This is from the post dated, from 2019.

Rohit Jain My understanding is that, this tariff revision was from 2019-20, as you mentioned, but because of COVID et cetera, it could not be implemented.

So, what I'm trying to understand is, do our numbers reflect the benefit of retrospective change in license fee or are we going to register a one-time gain whenever we get that income?

Seema Kumar You're right.

Whenever the realization happens, we will register again.

Right now, we have and [Inaudible00:20:34] and raised the bill.

IRCTC Limited 08.11.2023

Thank you.

Next question is from the line of Ankit Agarwal, an Individual Investor.

Please go ahead.

Ankit Agarwal I wanted to know that if you could provide any guidance for like FY24 revenue and in terms of margins and for FY25 as well?

Seema Kumar We can expect to continue with the same theme and do better.

Ankit Agarwal Okay.

And, ma'am, what would be the reason for decline in the Rail Neer revenues in the first half of FY24?

Seema Kumar See, Rail Neer, again, be it Catering or be it Rail Neer, this is directly linked to the number of people travelling in the train.

And as we have discussed in the earlier call, April, May, June is a peak season for rail travel because of summer rush.

And then June, July, August, Q2 is always if you compare, as compared to Q1, it would look little lesser.

But if you see the same period, identical period for the Rail Neer, in last year 2023-24 for Q2 I'm talking about, there's an increase of 3.81% in the Rail Neer segment as well, because we have registered a revenue of INR 78 crores as against INR 75 crores last quarter.

So, there is an increase in Rail Neer segment also this year.

Ankit Agarwal There's a margin decline as well in the Rail Neer and Rail Neer section in Q2. What's the reason behind that and what is the steps taken to revive it?

Seema Kumar Rail Neer's requirement is largely, it is directly linked to number of people travelling in the train.

So, if I have more cancellations and if I have lesser people travelling because of seasonality of April, May, June.

Again, you will see in the next quarter because of festive season there will be a jump.

This is a IRCTC Limited 08.11.2023

Thank you.

Next question is from the line of Madhuchanda Dey from MC Pro.

Please go ahead.

Madhuchanda Dey I have a couple of questions.

I mean, maybe I have missed this answer.

But I didn't get what was the reason for this kind of a 13% jump in the internet ticketing revenue sequentially?

Seema Kumar See, what happened in the internet ticketing, the tickets are booked 120 days in advance, because that is our advanced reservation period.

So, all these tickets were booked in advance, right?

Madhuchanda Dey Okay.

For the festive season?

Seema Kumar Yes.

Okay.

While the Catering and Rail Neer would be actually based on number of people travelling, while e-ticketing is in advance and Catering and Rail Neer is directly related to the number of people travelling during that time.

That is the reason.

Madhuchanda Dey Yes, got it.

And just one clarification.

This tourist category doesn't contribute anything, right, to the internet ticketing now?

IRCTC Limited 08.11.2023

Thank you.

Next question is from the line of Deepesh Lakhani from Dolat Capital.

Please go ahead.

Deepesh Lakhani So, my question was on your collaboration with Zomato in this quarter.

So, what is the response from this collaboration and are you making any margins out of this?

Seema Kumar See, as I stated in one of the call, it is just begin, it's a three-week old collaboration with Zomato.

And now what we have said is, for Zomato we have worked out a model where IRCTC is taking INR 40 per order, right?

And railway share comes to INR 16.

Deepesh Lakhani Okay.

Seema Kumar Actually, in the next quarter, picture will be clearer, how much volume Zomato is bringing to us and how much are the earning patterns.

That is why pilot has been limited to five stations for a six month period to understand how this model will work which is dependent on the volumes rather than percentage value of each order.

Deepesh Lakhani How many bottles are produced in a day, average, in this quarter?

IRCTC Limited 08.11.2023

Thank you.

That will be the last question for the day.

I would now like to hand the conference over to Ms. Seema Kumar for closing comments.

Seema Kumar I would like to thank each one of you who have taken time out to have a conversation with the management and to understand and give us also the direction in which company needs to look at to go for the further growth.

Wishing all of you and your family is a very Happy Deepawali.

Thank you and very good evening.

Thank you, ma'am.

On behalf of Dolat Capital, that concludes this conference.

Thank you for joining us and you may now disconnect your lines.

Note

This document has been edited to improve readability 2.

Blanks in this transcript represent inaudible or incomprehensible words.

Questions and answers

IRCTC Limited IRCTC Limited Q2 FY24 Earnings Conferen Event Date / Time : 8/11/2023,

Event Duration

44 mins 26 s CORPORATE PARTICIPA Ms. Seema Kumar Chairman and Managing Directo Mr. Ajit Kumar Director – Finance and Chief Fina Mr. Lokiah Ravikumar Director – Catering Mr. K.

Mishra Director – Tourism and Marketin

Q&A PARTICIPANTS

Jinesh Joshi : P 2.

Siddharth Agrawal : Sy 3.

Rohan Nagpal : H 4.

Rohith Jain : Ta 5.

Ankit Agarwal : In 6.

Madhuchanda Dey : M 7.

Deepesh Lakhani : D ce Call 16:00 Hrs. secs

ANTS

or ancial Officer ng rabhudas Lilladher Pvt Ltd ystematics elios Capital Asset Management ara Capital ndividual Investor MC Pro Dolat Capital 08 11 2023 IRCTC Limited 08.11.2023

Moderator · Conference Operator

Thank you very much.

We will now begin the question-and-answer session.

Anyone who wishes to ask a question, may press * and 1 on your touch tone telephone.

If you wish to remove yourself from the question queue, you may press * and 1 again.

Participants are requested to use handsets IRCTC Limited 08.11.2023

System · Call Header

Q2 FY24 Earnings Conference Call while asking a question.

Ladies and gentlemen, we will wait for a moment while the question queue assembles.

The first question is from the line of Jinesh Joshi from Prabhudas Liladher Private Limited.

Please go ahead.

Jinesh Joshi I have a question on the Catering segment.

So, I think in the month of September, we made an announcement that IRCTC will manage Catering facilities in all coaches and trains that are booked on the full tariff rate.

So, first, if you can just speak about the opportunity size that we target over here.

And also, what kind of incremental revenue do we foresee from this arrangement per se?

Seema Kumar Actually, this full tariff rate, FTR trains, these are train on demand booked by the party.

So, there is not a fixed kind of a target we can fix, but I can give you the kind of YoY demand we have.

This is not a very huge market, but it's a big responsibility, because it has been given entirely to the IRCTC to do the business.

Last year, there were roughly 100-odd trains which are booked on full tariff rates.

So, looking at the same kind of a traffic or maybe marginally depending on the market demand.

So, these trains are booked by the parties for the movement on special occasions et cetera.

Jinesh Joshi So, in nutshell, the opportunity size is not big enough, right?

Seema Kumar Right now, it can't be ascertained, but I can tell you what is the trend for the previous years.

We will know by the end of the year or maybe during the course of discussion, we will let you know by mail the details of number of trains run and the size of the pie we are looking at through the FTR trains.

Jinesh Joshi Sure.

My second question is also with respect to the Catering segment.

So, can you share how has been our response with respect to the tie-up with Zomato that we announced sometime back?

What is the fee per order that we get over here?

And I believe the current arrangement is limited to five stations, so do we plan to go Pan India over here?

Seema Kumar Yes, definitely.

This is just a pilot we have tied-up, because here we are dealing not per meal, we are dealing with the volumes.

So, we have come up with a pilot MoU, pilot agreement with the Zomato to start with.

And if it is successful, we will definitely like to go on the Pan India level.

IRCTC Limited 08.11.2023