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00:00Good morning and welcome to Earnings Edge right here at ATV Profit.
00:03We are now taking stock of IRCTC on the back of their quarter 1 numbers.
00:08Revenue grew by roughly around 11 odd percent while margins, while D grew compared to the
00:12same time last year, profitability was very strong up roughly 33 odd percent.
00:17To talk about the numbers and a little bit more on the segmental performance of the company,
00:21we are now joined by Mr. Sanjay Kumar Jain, the CMD of IRCTC.
00:26Good morning Mr. Jain and thank you so much for joining us today.
00:29I want to just start with, you know, the quarter 1 numbers.
00:33It's been a decent set of quarters, you know, which is impacted by, you know, elections
00:37as well as other heatwave and other issues as well.
00:41Talk us through, you know, how has this quarter been because we have seen some growth in segments
00:47such as, you know, catering as well as rail need, but seen some degrowth in tourism and
00:51internet ticketing.
00:53What led to this particular quarter on quarter impact and if you could talk us through the
00:56demand environment as well.
00:59Puneet, first of all, I wish good morning to everyone and let me clear you that this
01:11is not the excellent result only, it is the highest ever Q1 result, both in revenue and
01:18margin and another thing, all our segments except tourism has done equally well, they
01:27all grew in two digits and in tourism, yes, certainly because of code of conduct, model
01:34code of conduct due to election declaration, we could not do good, but we will be coming
01:43back very quickly in this quarter.
01:47Now, I just want to talk about the business per se, sir.
01:52As you get into quarter two, how are you seeing the demand environment currently?
01:57Are you seeing like starting July, have you seen an increased, you know, from passengers
02:02to go out and travel a bit more?
02:04What is it that you are seeing on the ground currently?
02:08You see, going forward, the environment in India today is that the investment in rail
02:18infrastructure is growing, economy is booming and we are in an environment where we are
02:25expected to get more number of trains in the days to come, so our all segments, be it catering,
02:33be it rail, be it IT and tourism also, because we mostly do rail based tourism, these all
02:41are likely to grow exponentially.
02:43Now, I just want to talk about, you know, the tourism business specifically.
02:50You've seen, you know, in this quarter there was an impact on the macro factors, but this
02:55business has seen quite a revival from the last year, we've seen positive margins also
03:00coming in compared to last year when it was negative about 20 odd percent.
03:05What is it that's changed in this particular year?
03:07What has the company done to improve these margins and how does this year look for the
03:11company for the tourism space?
03:14You see, largely our tourism business, we are doing two kinds of tourism business.
03:20One is mass tourism through our Bharat Gaurav trains and in that, certainly, yes, we could
03:28not do much because of Model Code of Conduct, but other business like RTP rail based tourism
03:35packages that has seen a growth of 26 percent and in our outbound tourism, it has increased
03:43by 229 percent in this quarter and we are seeing the same kind of things happening and
03:50when and as now Model Code of Conduct has gone, eight state, we have already done MOs
03:56with them.
03:57So our margin certainly will grow because of all these segment, which are highly profitable
04:05we have, we have included in our business.
04:09Anything in particular that you know, that has come about in the last two quarters, any
04:13kind of new MOUs that you signed with certain specific states that you want to call out?
04:18Yeah, we have signed our MOU with DMRC, CBI and couple of other MOUs are in the way and
04:28we have signed MOU with state government, eight state government, we have already signed
04:33two other state government, already the process is on, most likely we will be signing in this
04:40quarter only.
04:41Now, just let me take a step back from the segmental performance and talk about, you
04:45know, the two main triggers for you, which is going to be Vande Bharat as well as, you
04:49know, a larger focus on high-speed rail trains.
04:54What is the long-term benefit that you are seeing from these particular segments, which
04:59are the verticals, because you are present across a few verticals, which are linked to,
05:03you know, the tourism space as well as, you know, ticketing as well, what is the benefit
05:08that you see from, you know, these two spaces, the Vande Bharat as well as increased penetration
05:13of high-speed rail?
05:14You see, Vande Bharat and high-speed trains are certainly going to add infrastructure
05:20for free and smooth movement of passengers across India and that will give challenge
05:29to the even low-cost airlines and the more number of trains are coming, the more business
05:37is there for IRCTC, our only challenge will be to grab as much as possible as quickly
05:43as possible.
05:44Thanks.
05:45Well, that's good to hear, sir.
05:46Just one follow-up.
05:47What is the current contribution from Vande Bharat specifically for IRCTC and are you
05:53the sole supplier for across verticals of rail near tourism as well as, you know, catering
05:59or is there some other supplier also currently for the Vande Bharat?
06:02No, no, you see, so far as catering is concerned and rail near is concerned, IRCTC has been
06:10given the mandate and in rail near, as we are not able to supply the complete demand,
06:17though we have improved our rail near production, we have enhanced the capacity and are further
06:23enhancing the capacity, but as we are not able to fulfill the demand, so other players
06:29are also coming, but once we put our things in place, we will be gaining too much.
06:37You can specify on what's the current contribution from the Vande Bharat trains to revenue?
06:42It's a sizable one, you see, we have a total 51 pair of Vande Bharat, out of which catering
06:51we are doing on 48 Vande Bharat trains.
06:55So all the Vande Bharat trains are with us.
06:57So somewhere in the mid-teens, is that a number that we could go with?
07:02If you can't specify the exact number, somewhere in the mid-teens?
07:06Yes, certainly yes, because now you see the trains, the future trains are only Vande Bharat.
07:13So certainly when the number will add, so we will improve our share.
07:20Now just one question on the license fee, do you see IRCTC increasing the license fee
07:28any time over the next 12 to 18 months, because we are going to see a lot of demand, as you
07:32said, Q1 was affected due to Model Code of Conduct, but we will see, we are expecting
07:37a larger push on consumers from quarter three itself.
07:41Do you see any kind of impact on increasing the license fee currently?
07:46Do you see that happening over the next 12 to 18 months?
07:50Not now.
07:52My final question, sir, now margins we've seen for the internet ticketing segment be
07:56upwards of around 18%.
07:58You are guiding for better margins in the tourism space as well, and increasing the
08:03capacity of RailNil going forward.
08:05Do you see that this year will be a better year for margins for IRCTC compared to the
08:10last year?
08:11And how are you seeing the revenue potential, because there's a lot of impetus on growth
08:15in the second half itself.
08:18So if you could just guide us on these two things, margins across verticals, as well
08:21as revenue growth higher this year, because there's a lot of pressure on H2 to deliver.
08:27Good question.
08:28You see, what we are trying to do as of now, we want to improve our product mix, we want
08:36to improve certain segments which were laggard earlier, and our main target is to provide
08:45affordable facilities to the customers, so that we be competitive in the market, and
08:52we gain the major chunk of the market slowly.
08:55So our strategy would be at the moment, that add more and more number of business there,
09:02more and more customers there, and for that, even if we have to trade off with the same
09:08number of margins, we would like to add volume and the numbers.
09:16So our strategy is to improve the revenue first, and keeping and maintaining the same
09:21level of margins.
09:22Understood, sir.
09:23Revenue growth this year, while maintaining margins, it's a good outlook for IRCTC this
09:28year.
09:29Thank you, Mr. Jain, for joining us today and speaking to us on quarter one, as well
09:32as what looks like a good set of numbers, as well as a promising year for this particular
09:36financial year 2025.
09:38We wish you the best and look forward to our next conversation, but thank you so much for
09:41joining us today.