alexa

Search in Indianmoney's WealthPedia

Home Articles How IRCTC Makes Money?

How IRCTC Makes Money?

IndianMoney.com Research Team | Posted On Thursday, February 13,2020, 03:43 PM

5.0 / 5 based on 4 User Reviews

How IRCTC Makes Money?

 

 

IRCTC is a wholly-owned subsidiary of Indian Railways. It’s the only authorized entity by the Indian Railways which offers catering services to railways and online railway tickets for trains in India. It’s not just this. IRCTC also offers non-railway services like e-catering and executive lounges and also budget hotels.

Indian Railway Catering and Tourism Corporation popularly known as IRCTC generated massive profits. IRCTC has generated 180% year-on-year growth in Q3FY20. IRCTC Q3 profits at Rs 206 Crores have registered a 3-fold profit jump. Its profits were Rs 206 Crores for the December quarter against Rs 73.6 Crores a year-ago. IRCTC had also declared interim dividend of Rs 10 on shares of face value Rs 10.

IRCTC is a miniratna profit-making Central Public Sector Unit. IRCTC gets most of its money from the catering services. Catering contributes 55% to IRCTC Total Revenue. Travel and tourism offers 23.3%, e-ticketing contributes nearly 13% and packaged water about 9%. Take a look at this fact. About 70% of railway tickets booked online in FY19 were through IRCTC.

See Also: Best Investment Plans for Millennials in 2020

The IRCTC IPO had a stellar debut on October 14th 2019. IRCTC listed at Rs 644 on BSE. This was a 101.25% premium over the Rs 320 a share issue price. This was much higher than even what the grey market had predicted. If you had invested in the IRCTC IPO, your money would have doubled in a day. Retail investors also got IRCTC shares at Rs 10/share discount. Today, IRCTC has hit Rs 1599 a share. So what makes IRCTC tick?

Want to know more on Investment Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

How IRCTC Makes Money?

IRCTC has a monopoly in the online railway ticket business. Its money comes from 4 business segments:

  • Catering which is selling food on railway journeys.
  • Travel and tourism for destination-specific packages.
  • E-ticketing
  • Packaged drinking water called Rail Neer.

So, where IRCTC gets its money from? Well, IRCTC is virtually a monopoly. IRCTC is the only firm that provides catering services to the railways, packaged drinking water to the railways at all railway stations and also trains in India. It’s a dominant player in travel-related players.

See Also: Basics of Financial Planning

India’s packaged drinking water will grow at 16-17% CAGR and reach a massive Rs 18,000-19,000 crores by FY24. The railway catering industry would grow at 7.5% to 8.5% CAGR from Rs 1,200 Crores to Rs 1,500 Crores by FY24. IRCTC would maintain profits over the years. IRCTC shares are available at reasonable valuations.

Risks:

Like all monopolies IRCTC is not immune from risk. It could face challenges if the Government allows new private players into the game.

IRCTC and Private Railways:

Indian Railways has allowed private firms to operate passenger trains. IRCTC had introduced the Lucknow-Delhi Tejas Express last year. IRCTC third private train will be launched next week. This train is called the Kashi Mahakal Express and runs between Varanasi and Indore. This Super Fast air-conditioned Corporate Train would travel long distances. The train covers Varanasi, Ujjain, Bhopal, Jhansi, Kanpur, Lucknow, Sultanpur and Indore.

See Also: Best Investment Plan For 3 years

This is the overnight train solely run by IRCTC. High quality vegetarian food, on-board bedrolls, housekeeping services and on-board security services are offered by IRCTC. There’s complimentary travel insurance of Rs 10 Lakhs during the journey. You can book tickets through the ‘IRCTC Rail Connect’.

You May Also Watch

Iframe Content

Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.

Have a complaint against any company? IndianMoney.com's complaint portal Iamcheated.com can help you resolve the issue. Just visit IamCheated.com and lodge your complaint. If you want to post a review on any company you can post it on Indianmoney.com review and complaint portal IamCheated.com.

Be Wise, Get Rich

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!
CIBIL Meter
Get It now!
Attention!

This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.